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28–967PDF 2006

ASSESSING ENERGY AND SECURITY ISSUES IN

CENTRAL ASIA

HEARING

BEFORE THE

SUBCOMMITTEE ON THE MIDDLE EAST 

AND CENTRAL ASIA

OF THE

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

JULY 25, 2006

Serial No. 109–219

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.house.gov/international—relations 

(II)

COMMITTEE ON INTERNATIONAL RELATIONS 

HENRY J. HYDE, Illinois, Chairman 

JAMES A. LEACH, Iowa 

CHRISTOPHER H. SMITH, New Jersey, 

Vice Chairman 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

EDWARD R. ROYCE, California 

PETER T. KING, New York 

STEVE CHABOT, Ohio 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MARK GREEN, Wisconsin 

JERRY WELLER, Illinois 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

KATHERINE HARRIS, Florida 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL MCCAUL, Texas 

TED POE, Texas 

TOM LANTOS, California 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

ROBERT MENENDEZ, New Jersey 

SHERROD BROWN, Ohio 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JOSEPH CROWLEY, New York 

EARL BLUMENAUER, Oregon 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

BETTY MCCOLLUM, Minnesota 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

RUSS CARNAHAN, Missouri 

THOMAS E. MOONEY, SR., Staff Director/General Counsel 

ROBERT R. KING, Democratic Staff Director 

SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA

ILEANA ROS-LEHTINEN, Florida, Chair 

STEVE CHABOT, Ohio, Vice Chair 

THADDEUS G. MCCOTTER, Michigan 

JOHN BOOZMAN, Arkansas 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

JO ANN DAVIS, Virginia 

MIKE PENCE, Indiana 

KATHERINE HARRIS, Florida 

DARRELL ISSA, California 

GARY L. ACKERMAN, New York 

HOWARD L. BERMAN, California 

JOSEPH CROWLEY, New York 

SHELLEY BERKLEY, Nevada 

ADAM B. SCHIFF, California 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

RUSS CARNAHAN, Missouri 

YLEEM POBLETE, Subcommittee Staff Director 

MATT ZWEIG, Professional Staff Member 

YEVGENY GUREVICH, Professional Staff Member 

DAVID ADAMS, Democratic Professional Staff Member 

LEE COHEN, Staff Associate 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. Steven R. Mann, Principal Deputy Assistant Secretary, Bureau of South 

and Central Asian Affairs, U.S. Department of State ...................................... 6

Ms. Lana Ekimoff, Director, Office of Russian and Eurasian Affairs, U.S. 

Department of Energy ......................................................................................... 10

Ms. Zenyo Baran, Director, Center for Eurasian Policy, Hudson Institute ........ 32

Steven Blank, Ph.D., Research Professor of National Security Affairs, U.S. 

Army War College ................................................................................................ 49

Ariel Cohen, Ph.D., Senior Research Fellow, Heritage Foundation .................... 57

Mr. Robert Ebel, Chairman, Energy Program, Center for Strategic and International Studies ................................................................................................... 75

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Mr. Steven R. Mann: Prepared statement ............................................................. 7

Ms. Lana Ekimoff: Prepared statement ................................................................. 13

Ms. Zenyo Baran: Prepared statement .................................................................. 36

Steven Blank, Ph.D.: Prepared statement ............................................................. 50

Ariel Cohen, Ph.D.: Prepared statement ............................................................... 60

Mr. Robert Ebel: Prepared statement .................................................................... 77

(1)

ASSESSING ENERGY AND SECURITY ISSUES 

IN CENTRAL ASIA 

TUESDAY, JULY 25, 2006

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE MIDDLE EAST

AND CENTRAL ASIA,

COMMITTEE ON INTERNATIONAL RELATIONS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:10 p.m., in room 

2200, Rayburn House Office Building, Hon. Ileana Ros-Lehtinen 

(Chairman of the Subcommittee) presiding. 

Ms. ROS-LEHTINEN. The Subcommittee will come to order. Thank 

you so much. I would first like to thank the audience. I know we 

have a standing-room-only crowd out there. I hope you will get 

some seats. 

Thank you for attending this hearing today to listen to important 

issues and thank you to the panelists for being here as well. 

The developments in Central Asia are of a tremendous significance to United States energy and security interests in the region. 

Since gaining their independence from the Soviet Union in 1991, 

United States focus on Central Asia has increased dramatically, as 

indicated by American efforts to protect the sovereignty, freedom 

and democracy of these newly independent states. 

Our interests in Central Asia were further magnified after the 

vicious terror attacks against our Nation on September 11, as 

greater cooperation with the region was needed to fight Islamist extremists worldwide and to address broader strategic objectives, including the growing problem of dependency on Middle East energy 

supplies. 

Our efforts in the energy arena go hand-in-hand with our political efforts of helping the governments in the region establish stable democratic institutions and protect human rights, while eradicating the illegal drug trade and fighting Islamist terrorism. 

Unfortunately, the region’s ability to profit from their energy resources in the past has been limited by Russia’s monopoly over 

transporting Central Asia’s oil and gas. By continuing to support 

diversification of pipelines, we will ensure a free flow of energy 

supplies to Western consumers and expand Central Asia’s economy 

through investment and development. 

We would ask our witnesses today to describe the range of U.S. 

energy concerns and energy interests in the region, in themselves, 

and their relationship to broader U.S. strategic objectives and 

needs. 

2

Linked to this is the growing influence of the Shanghai Cooperation Organization (SCO) and what efforts we are undertaking to 

counter it. As indicated by the developments at the organization’s 

recent summit, Russia and China have intensified their efforts to 

isolate the United States politically, militarily and economically 

from Central Asia. Moscow and Beijing were successful in convincing the Uzbek leadership that the United States sought to 

overthrow their government. This resulted in the closing of an 

American military base in Uzbekistan last year. 

Though unsuccessful, similar efforts were made by Russia and 

China to pressure Kyrgyzstan to close a strategic United States air 

base in its country that is currently being used in the counterterrorism efforts in Afghanistan. This undue influence extends into 

the realm of human rights and political reforms. 

At the joint summit declaration on International Information Security, the Shanghai Cooperation Organization leaders expressed 

concern that modern information and communication technologies 

presented a danger ‘‘for the entire world tantamount to that from 

the use of weapons of mass destruction.’’

If we cease pressing the governments in Central Asia on promoting democracy, rule of law, and free trade, we could 

marginalize the people of those countries, while undermining our 

long-term efforts to create an environment that prevents the 

growth of Islamist extremism and ensures long-term stability and 

prosperity. 

By the same token, if we allow ourselves to be marginalized by 

Moscow and Beijing, we could lose our influence in the region and 

could fail in achieving our immediate security goals and protecting 

our energy interests in Central Asia. 

We would welcome insight from our panelists today on how to 

counter the pernicious influence of the Shanghai group. How does, 

or can, the U.S. approach strike the balance between our efforts at 

democracy in the region and our security objectives? 

Another issue of concern is the Shanghai group’s growing closeness with Iran, which has an observer status in the organization 

and has expressed its desire to become a full member. In light of 

the Islamist state’s confrontational behavior in continuing to fund 

Islamist terrorist groups like Hezbollah, in pursuing activities that 

can be used for nuclear weapons and in violation of nonproliferation obligations, we must make it a high priority of United States 

foreign policy to prevent Iran from gaining influence in Central 

Asia. 

The United States must emphasize to the members of the SCO 

that enhancing their relationship with a rogue, terror-financing 

country like Iran will further escalate their own problems with Islamic terrorism. 

We would welcome the assessment from our panelists on Iran’s 

objectives in the region and how its growing relationship with Russia and China on the military front and with respect to unconventional weapons, affects United States energy and security interests 

in Central Asia. 

What are your views on the recent talks between the United 

States and Russia regarding potentially allowing Moscow to store 

spent nuclear fuel from reactors around the world? 

3

Although this might lead to a breakthrough with Moscow on taking a stronger approach toward Iran, there is also a possibility that 

this will enhance Russia’s dominance over Central Asia. 

The relationship between United States energy and security interests in the region are directly related to the ability of the Central Asian states to have stable, democratic governing bodies and 

free market economies, as well as their ability to confront Islamist 

terrorist threats and dangers involved in the increasing drug trade. 

Again, I thank the members of the panel for being here today, 

and I look forward to their testimony. 

With that, I would like to turn to our Ranking Member, Congressman Gary Ackerman of New York. 

Mr. ACKERMAN. Thank you very much, Madam Chairwoman, for 

your leadership, and especially for calling today’s hearing on assessing energy and security issues in Central Asia, a topic that deserves greater thought and consideration by the American people 

and the Congress than it has heretofore received. 

As energy demand continues to increase globally, the strategic 

importance of Central Asia will become clearer than it is today. In 

truth, the development of the former Soviet republics into more important energy exporters is probably the only region that has received much attention, inadequate as it may be. 

Back in 2001, when the Bush Administration reached out to the 

former Soviet republics to enable our military operations in Afghanistan, few people considered the long-term implications of our 

involvement in the region, beyond the at-the-moment need for their 

cooperation in pursuing the War on Terror. 

To understand why Central Asia hasn’t been on the radar screen 

in Washington political circles, I think we should recall the glib 

promises that were made about the abundance of Iraqi oil that 

were promised in a post-Saddam utopia. There is no way to deny 

that our misadventure in Iraq has distracted our Government from 

a host of issues that have not gone away, while our attention has 

been fixed on the bloody train wreck that amounts to Bush Administration policy in Iraq. 

Likewise, Afghanistan’s nascent democracy is still insecure, and 

the threat from Taliban al Qaeda operatives is growing, notwithstanding the self-satisfied pronouncement from the political trenches of Washington, DC. 

While Washington has been distracted, Iran and China have 

made greater inroads in Central Asia, seeking commercial and security agreements that ensure the flow of petroleum and natural 

gas to be used or refined and resold. Russia, too, has been active 

in trying to establish by commerce the dominance it used to enjoy 

by force. 

Russia’s appetite for control of petroleum resources in the region 

is barely concealed. The reality is that most Central Asia petroleum—after transit through Russia—is on its way to the West, and 

in light of the winter cutoff of Ukraine, this fact should give us 

some pause for thought. 

Moreover, the regimes that have emerged since the end of the 

Soviet Union are, broadly speaking, friendly kleptocracies. Every 

one of them has adopted a government model built around what is 

4

politely referred to as a ‘‘strongman,’’ a position commonly known 

as a dictator. 

In their haste to restore order and promote development, many 

of the Central Asian nations have chosen to push democratic development and respect for human rights off to the side of the road. 

While America shouts for democracy in the Middle East, our failure 

to observe and denounce its absence in Central Asia, aside from 

making us look like a pack of hypocrites, also places us in tacit alliance with the existing regimes. 

If one were seeking to understand the dramatic growth of 

Islamist movements in previously secular Central Asian states, 

simply looking at government repression would be a fruitful place 

to begin. It scarcely requires a political science degree to understand that the Central Asian states that have chosen to crack down 

on political opponents and Islamic groups in the name of the War 

on Terror are seeking not the common good of a world without terror, but the private good of a kleptocracy to get fat without the irritation of public protest. 

If the Bush Administration truly seized the political moment created by 9/11 and renewed appreciation in the United States for the 

importance of addressing foreign policy issues before they become 

crises, our policy tools for dealing with Central Asia would be more 

robust. We would have a broader degree of engagement, a more 

consistent policy with regard to both the promotion of our values 

and the commercial exploitation of the region’s petroleum resources, and most obviously, our foreign assistance in the region 

would not be declining. 

Central Asia, I fear, is emerging from a formative period still afflicted by bad governance, weak institutions, and vulnerable to 

variable whims of superpower self-interest. 

It is not too late, however, for us to try to get it right. Consistent 

U.S. promotion of democracy, good governance and commercial development can still create a better future for the region than the 

naked self-interest of the other great powers. 

Moreover, only the United States has the potential to help resolve lingering conflicts like that between Armenia and Azerbaijan. 

There is a limit to how much this country can do, and I understand that the President and the Secretary of State are only 

human and can only focus on a few crises at a time. But there 

should be no mistake that the development of Central Asia, either 

for good or bad, will have significant consequences to the United 

States for our security, for our economy, and for our values. 

A political scientist who worked in the previous Administration 

observed that during his time in office President Clinton learned 

the hard way that ‘‘Either you do foreign policy or foreign policy 

does you.’’ That choice in Central Asia awaits us. 

I thank Chairwoman for her leadership, and I look forward to today’s witnesses. 

Ms. ROS-LEHTINEN. Mr. Carnahan. 

Mr. CARNAHAN. Thank you, Madam Chairman. I want to thank 

you and the Ranking Member for holding this hearing today regarding energy and security issues in Central Asia. Since they border both China and the Middle East, security concerns in the counVerDate Mar 21 2002 15:55 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 F:\WORK\MECA\072506\28967.000 HINTREL1 PsN: SHIRL
5

tries that comprise Central Asia should be receiving this attention, 

and I want to thank you both. 

We will do everything we can to ensure that the uranium presence in the region does not continue to spread. Expanding capabilities to its recent support of Hezbollah attacks in Israel, the threat 

of a rogue Iranian nation must be taken seriously. Issues related 

to energy and security have become increasingly intertwined in recent years. 

Though we need to decrease our dependence on foreign oil, we 

must also make certain that investments in U.S. energy resources 

are protected throughout the world. Moreover, we need a firm hand 

to ensure that Iran does not further infiltrate Central Asia, which 

would have a direct impact on United States and international security. 

I look forward to hearing the testimony of the witnesses and 

thank you each for being here today. 

Ms. ROS-LEHTINEN. Thank you so much. 

We are pleased also to be joined also by Congresswoman Shelley 

Berkley from Nevada. We have just made some very enlightening 

opening statements, one more enlightening than the others. 

Ms. BERKLEY. You know, I will pass, since I just arrived. 

Ms. ROS-LEHTINEN. Thank you. Good answer. 

Let me introduce our first set of panelists. 

Ambassador Steven Mann joined the Bureau of South and Central Asian Affairs in May, 2006, following his assignment as Senior 

Adviser for Eurasia. In the latter position, he represented the 

United States in several Eurasian conflict negotiations. 

From 2001 to 2005, he was a senior United States official responsible for the Caspian energy issues, and he was heavily involved in 

realizing the BTC pipeline and the successful launch of the Caspian Pipeline Consortium among a wide range of other oil and gas 

projects. 

In 2003, he served on the staff of the Coalition Provisional Authority in Iraq, ending the UN Oil-for-Food Program, and transferring its assets and programs to Coalition auspices. 

In 1985 to 1986, Ambassador Mann was a fellow at the Kennan 

Institute for Advanced Soviet Studies at Columbia. He is a 1991 

distinguished graduate of the National War College. Ambassador 

Mann was born in Philadelphia. He holds an A.B. Degree from 

Oberlin College and master’s degrees from Cornell and Columbia 

Universities. His languages are Russian and German. 

Next we will hear from Lana Ekimoff. Lana Ekimoff is the Director of the Office of Russian and Eurasian Affairs in the Office of 

Policy and International Affairs at the U.S. Department of Energy. 

She is responsible for directing and managing the Department’s cooperation with the countries in the former Soviet Union. She has 

been involved with these countries since just before the breakup of 

the Soviet Union, when the Department initiated bilateral energy 

talks in this area of the world. 

Ms. Ekimoff received a B.A. from Penn State and an M.A. from 

Case Western, as well as an M.B.A. from George Washington University. 

Your full statements will be made a part of the official record. 

Please feel free to summarize briefly your remarks. 

6

Thank, Mr. Ambassador. 

STATEMENT OF MR. STEVEN R. MANN, PRINCIPAL DEPUTY ASSISTANT SECRETARY, BUREAU OF SOUTH AND CENTRAL 

ASIAN AFFAIRS, U.S. DEPARTMENT OF STATE 

Ambassador MANN. Thank you, Madam Chairwoman and distinguished Members of the Subcommittee. I am very pleased to be 

here today to discuss energy and security issues in Central Asia. 

Central Asia matters greatly as the world confronts tight energy 

markets and as we consider ways to strengthen our energy security. This hearing’s focus on Central Asia is technically well timed 

for many reasons, but also, given the inauguration of the BakuTbilisi-Ceyhan pipeline on July 13. That pipeline, the centerpiece 

of the East-West energy corridor, has changed the strategic landscape of Eurasia in a very positive way. 

Since the independence of the new Caspian states 15 years ago, 

the United States has been in the forefront of oil and gas development in the region, and our efforts are paying off. The CPC pipeline from Kazakhstan to Novorossiisk, which opened in 2001, is another major achievement; and we look forward to the opening of 

the South Caspian gas pipeline later this year. 

The spotlight has focused on pipelines, but underlying these midstream accomplishments is the exceptional work that has been 

done in developing new oil and gas fields, notably the massive 

Tengiz and Kashagan deposits in Kazakhstan. This new non-OPEC 

oil coming on the market is an important contribution to our energy security. 

Kazakhstan will play an even greater role in energy markets in 

the future, and we are encouraging the Kazakh Government to 

build on the successful record that our companies have established 

and widened their role in future oil and gas development. 

Major United States oil and gas firms such as Chevron, 

ConocoPhillips and ExxonMobil have extensive investments in the 

Tengiz and Kashagan fields. In addition, U.S. oil services companies, and equipment providers such as Parker Drilling, McDermott 

and Baker Hughes have found promising business opportunities 

there. 

Now, in Turkmenistan, there is less investment, United States 

and otherwise; and I note, as well, that Turkmenistan remains 

heavily dependent on the Gazprom pipeline system for the export 

of its great natural gas reserves. This hearing addresses security 

issues as well, and it is important to note the role that energy development plays in Central Asian security. 

A key question for the resource-rich states of Kazakhstan and 

Turkmenistan is avoiding the resource curse, using their energy 

revenues in a way that contributes to stable development, rather 

than undercutting it. An overriding aspect of security also is supporting these new states and finding new export routes, so that 

they are not dependent on one company, one route, to export their 

product. 

Our policy of multiple pipelines is a policy of antimonopoly, and 

we believe that serves the broader interests of our friends in Central Asia very well. So, with the completion of this first phase of 

7

the East-West energy corridor, we must now press on with the second phase of supporting new energy routes out of Central Asia. 

The Administration warmly welcomes the interest of Congress in 

these issues, and we urge Members to increase their interaction 

with this pivotal region through visits to the region through parliamentary exchanges. 

Madam Chairman, thank you very much, and I look forward to 

your observations and questions. 

Ms. ROS-LEHTINEN. Thank you, Mr. Ambassador. 

[The prepared statement of Mr. Mann follows:]

PREPARED STATEMENT OF MR. STEVEN R. MANN, PRINCIPAL DEPUTY ASSISTANT SEC- RETARY, BUREAU OF SOUTH AND CENTRAL ASIAN AFFAIRS, U.S. DEPARTMENT OF

STATE

Madam Chairwoman, distinguished members of the Sub-Committee, I am pleased 

to be here today to discuss energy and security issues in Central Asia. This discussion of engaging Central Asian countries on energy cooperation is very timely as the 

world confronts tight oil markets and as we consider ways to deepen energy security 

nationally and globally. This hearing’s focus on Central Asia is particularly appropriate given the inauguration of the Baku-Tbilisi-Ceyhan pipeline on July 13, an 

event which I had the pleasure of attending. 

U.S. policy for the development of oil and gas reserves in Central Asia is predicated on the use of best commercial standards and transparency to ensure that energy resources are developed efficiently and for the benefit of the countries concerned. In line with this, we have pursued a policy of encouraging multiple pipelines 

to afford the countries of the region options for export of their oil and gas. The completion of the Caspian Pipeline Consortium (CPC) pipeline from Kazakhstan to 

Novorossiisk on the Black Sea in Russia and the inauguration of the Baku-TbilisiCeyhan (BTC) pipeline from Azerbaijan to Turkey are signal successes of this policy. 

We all can be especially proud of the role that American firms have played in these 

endeavors. BTC in particular represents a new environmental, social, and design 

benchmark for energy transport worldwide. The construction of the South Caucasus 

Pipeline will bring Azerbaijani natural gas to European markets and, ultimately, 

Turkmen and Kazakhstani gas may cross the Caspian and share this route. Our 

pipeline policy—a policy of antimonopoly—is changing the landscape of Eurasia in 

an important and welcome way. 

In line with these promising developments, the United States welcomes the June 

16 signing by Azerbaijan and Kazakhstan of an agreement to facilitate access of 

Kazakhstani oil to the BTC pipeline. Such an agreement provides Kazakhstan additional capacity to export the large volumes of crude that will need to reach markets 

starting in 2009–10, when the Kashagan field is slated to come on stream. We wish 

Kazakhstan and Azerbaijan well in their next round of negotiations on the host government agreements with the individual oil companies that will protect the interests 

of governments and project investors alike, paving the way for commercial partnerships and prospective international financing. 

U.S. firms are among the biggest investors in Central Asia’s energy sector, and 

this is a welcome development in many ways. Major U.S. oil and gas firms such as 

Chevron, ConocoPhillips, and ExxonMobil have extensive investments in the Tengiz, 

Karachaganak, and Kashagan fields. In addition, U.S. oil services companies and 

equipment providers such as Parker Drilling, McDermott, and Baker Hughes Services International have found promising opportunities. When speaking of oil and gas 

development, we must keep in mind that regionally Kazakhstan and Turkmenistan 

hold the largest reserves. Kyrgyzstan and Tajikistan have significant hydroelectric 

resources, but little oil and gas. Uzbekistan is largely closed to Western companies 

and has more limited potential. 

The extent of Turkmenistan’s gas reserves remains unclear, and Turkmenistan is 

completely dependent on the Russian pipeline system to bring its gas to market. A 

proposed trans-Caspian pipeline foundered in 2000 when the parties could not reach 

an acceptable commercial agreement, and little has changed since then. 

With the completion of the first phase of the East-West Energy Corridor, we must 

now press on with the second phase of supporting new energy routes out of Central 

Asia. We also encourage the Congress to continue to increase its knowledge and understanding of Central Asia through visits and parliamentary exchanges. Such visits, along with student and cultural exchange programs, contribute greatly to bringing the United States and Central Asia closer together. 

8

Countries bordering the Caspian Sea—Azerbaijan, Iran, Kazakhstan, Russia, and 

Turkmenistan—are significant oil and gas suppliers to world markets, and their importance is growing. The countries of the north Caspian have reached delimitation 

agreements, but Iran and Turkmenistan have not yet joined these agreements, 

among other reasons, because of Iranian insistence on its claim to one-fifth of the 

Sea. Lack of agreement has impeded exploration and development of hydrocarbon 

resources in disputed waters, and there remains the potential for conflict in the 

southern Caspian where promising offshore deposits of oil and gas remain to be developed. 

Kazakhstan—Energy 

Given the scope of the energy supply and demand challenges we face today and 

in years ahead, Kazakhstan can play a very helpful role in addressing the world’s 

energy needs. Kazakhstan and the entire North Caspian region have tremendous resources. At Tengiz, Kashagan, and other fields, nearly 30 billion barrels of reserves 

are proven; there is potential for up to 100 billion barrels. Natural gas reserves generally range from 65–70 trillion cubic feet, and could be as high as 100 trillion cubic 

feet. We strongly support the work of U.S. energy companies and their international 

partners, who are now focused on ramping up production and improving transportation to markets. U.S. energy companies were among the first non-CIS foreign investors in Kazakhstan; we expect American companies to be active in the region for 

many years to come. 

Kazakhstan, a huge country, remotely located, for many years held valuable resources but lacked export routes to global markets. After the breakup of the Soviet 

Union, Kazakhstan had to rely on Russia’s Transneft to carry its crude oil exports. 

That situation changed in 2001, when the Caspian Pipeline Consortium (CPC) completed construction of a nearly 1,000-mile pipeline from the North Caspian to 

Novorossiisk, Russia, on the Black Sea. CPC, a joint venture with private partners 

that include U.S. energy companies, now transports over 600,000 barrels per day, 

mostly from the Tengiz field, and gas condensate from the Karachaganak field. The 

partners have drawn up plans to expand CPC capacity to 1.34 million barrels per 

day by 2009. Those plans have been delayed, however, as Russia expresses concerns 

over tariffs, corporate governance and management control. We have strongly encouraged the Russian Government to work constructively with CPC partners to resolve these issues and move forward with expansion, particularly as production in 

Kazakhstan is set to increase. 

Overall, Kazakhstan produced about 1.29 million barrels of oil per day (b/d) in 

2005, and exported, through CPC and other routes, about one million b/d. The 

Kazakhstani Government expects production to increase to about 3 million b/d by 

2015, especially as the huge Kashagan field comes into production. Moreover, 

Kazakhstan has expanded production of natural gas in recent years, and expects to 

reach 570 billion cubic feet this year. A lack of export infrastructure—plus a focus 

on oil—has limited gas production in Kazakhstan; previously, gas had been flared 

or re-injected into oil wells to maintain production pressure. The Government of 

Kazakhstan is now studying options for increasing gas production and distributing 

it to global markets. As Kazakhstan aims to expand oil and gas production, it will 

require additional investment. We will encourage Kazakhstan to be transparent and 

give all capable companies fair access in any new tender process, whether for new 

acreage or for subcontracts on existing projects. 

Recognizing strong demand for crude in the east, Kazakhstan and China have 

begun constructing a three-part pipeline to China. Scheduled for completion in 2011, 

it will extend from Atyrau in the north Caspian region to western China and will 

ultimately have the capacity to carry 400,000 b/d. The section between Atasu and 

Alashankou was completed in December and is already transporting oil. Kazakhstan 

and China are also carrying out a feasibility study for a gas pipeline to China. The 

sale of PetroKazakhstan, a Canadian venture, to the China National Petroleum Corporation is indicative of China’s focus on new sources of energy. Clearly, demand 

for oil in East Asia, as well as in South Asia, is expanding rapidly. Kazakhstan, 

given its location, is well suited to meet a portion of those demands. At the same 

time, we expect Kazakhstan to continue exporting to the West, particularly from the 

Tengiz, Karachaganak, and Kashagan fields. 

We need to continue our work with Kazakhstan to promote transparency and private investment, and to encourage leaders to expand cooperation with U.S. energy 

companies. Moreover, we must work with Kazakhstan and other countries of Central Asia and the Caucasus to encourage them to expand infrastructure, and, in particular, to increase options for the delivery of oil and gas to market. Continued improvement of the investment regime and stable tax rates are essential in ensuring 

continued U.S. investment on a commercial basis. 

9

The United States has urged the prudent use of energy resources in Central Asia 

through transparency. The Extractive Industries Transparency Initiative (EITI), in 

which Kazakhstan participates, is a step forward in ensuring increased transparency and appropriate oversight over revenues from hydrocarbon extraction. The 

International Monetary Fund has also praised Kazakhstan’s management of its National Fund, in which oil and gas revenues are placed. 

Kazakhstan—the Broader Relationship 

The United States has long-term interests in Central Asia. Our strategic goal for 

the countries of Central Asia, including Kazakhstan, is to support their development 

as fully sovereign, democratic, stable and prosperous nations, contributing to regional stability and the global war on terrorism and potentially serving as models 

of ethnic and religious tolerance. Our relations with the five countries of Central 

Asia rest on three pillars: security; economic reform and development, including the 

oil and gas sector; and democratic reform. 

Kazakhstan is one of the premier performers in the former Soviet Union on the 

first two pillars, but needs to move forward on its democratic reform plans. The best 

guarantor of Kazakhstan’s future is a prosperous, stable, and democratic society 

where all have a stake in the political system. 

The United States and Kazakhstan enjoy a vigorous strategic partnership with a 

constant stream of high-level visitors. Energy Secretary Bodman met with President 

Nazarbayev and Energy Minister Izmukhambetov in March,Vice President Cheney 

met with President Nazarbayev in May, Secretary Rice saw Foreign Minister 

Tokayev on July 6, and Agriculture Secretary Johanns is in Kazakhstan now on an 

agricultural trade mission. We expect this trend to continue. 

The United States is assisting Kazakhstan to combat threats arising from narcotrafficking, terrorism, and all smuggling of contraband, including weapons of mass 

destruction, by building up Kazakhstan’s rapid reaction capabilities. The U.S.-funded border security training program recently donated three 42-foot patrol boats to 

the Maritime Border Guards. Our security assistance programs are enabling the refurbishment of facilities at the Maritime Academy in Aktau, and we maintain a robust program of engagement to ensure that Kazakhstan has the capability to monitor and manage its land and sea borders. Kazakhstan is also acquiring with U.S. 

assistance refurbished Huey helicopters for use as part of its rapid reaction forces. 

Kazakhstan was the first Central Asian state to develop and secure NATO approval for a Individual Partnership Action Plan, which has helped Kazakhstan gain 

a better understanding of NATO’s role and purpose. Its participation in ordnance 

disposal efforts in Iraq has improved the Kazakhstani military’s interoperability 

with U.S. forces. Kazakhstan has shown the greatest commitment to military modernization, both of equipment and doctrine, in Central Asia. 

Shanghai Cooperation Organization 

It is logical that the countries of Eurasia would want to work together in a regional organization such as the Shanghai Cooperation Organization (SCO) to address economic concerns and trans-national threats. It is important for all members 

to have an equal voice in the organization’s agenda and outcomes. We regret when 

it is used by some to pursue an unhelpful agenda such as the 2005 summit statement on coalition basing. We note however that the 2006 summit took a more constructive approach, despite the efforts of President Ahmadinejad. We believe that 

the SCO can play a useful role in coordinating regional anti-terrorism efforts and 

supporting economic development. However, it should not become an engine of exclusion or domination by its larger members. We continue to share our views regarding the Shanghai Cooperation Organization in our bilateral discussions with 

member countries. 

Regional Integration Initiative 

The United States firmly supports maintaining and expanding Central Asia’s ties 

to the Euro-Atlantic community, while also looking for new opportunities to the 

south. The creation of the State Department’s Bureau of South and Central Asian 

Affairs reflects this expanded view. Institutions such as NATO and the Organization 

for Security and Cooperation in Europe (OSCE) will continue to draw the nations 

of Central Asia closer to Europe and the United States, as we seek new ties and 

synergies with nations to the south. 

As Secretary Rice noted in her speech at Eurasian University in Astana last October, Kazakhstan has the potential to become the locomotive of growth for Central 

Asia and to give impetus to a ‘‘corridor of reform’’ extending southward to Afghanistan and the India Ocean. Kazakhstan’s expanding economy and mounting funds for 

investment will ensure it a growing regional role. In addition to our encouragement 

of continued economic and commercial reforms, we look to Kazakhstan to make conVerDate Mar 21 2002 15:55 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 F:\WORK\MECA\072506\28967.000 HINTREL1 PsN: SHIRL
10

comitant political reforms that will establish the democratic institutions fundamental to stability and the orderly transfer of power when President Nazarbayev 

completes his current term in 2012. 

The United States and the countries of the broader region share an interest in 

the free movement of energy, people, goods, and information from the Kazakh 

steppes to the Indian Ocean. We want not only to support economic development 

along a north-south axis, but also afford Afghanistan access to a wider world, thus 

becoming a bridge, not a barrier. In this vision, the United States wants to be the 

convener, facilitator, and engine for change by prying open physical and diplomatic 

bottlenecks. We look forward to undertaking a strategic dialogue on regional integration with the countries of the region later this year. We will also work with multilateral institutions, such as the Asian Development Bank, the EBRD, the World 

Bank, governments, and the private sector. 

We are making progress in the areas of transportation, energy, telecommunications, and trade. The U.S.-funded $36 million Afghan-Tajik Bridge is scheduled 

to open next year. We are assisting with construction of customs and border crossing 

facilities throughout the region. We have almost finished the Afghan ring road, cutting travel time between Kabul and Mazar-e Sharif in half. We are making progress 

on rehabilitation of the Afghan energy grid, and hope to lay the foundations for export of electricity from Tajikistan to Afghanistan. The U.S. Trade and Development 

Agency-sponsored Central Asian Power Sector Forum in June brought together all 

the governments in the region and the private sector to explore specific projects for 

Central and South Asian energy trading. We are seeking to reduce trade and investment barriers through a U.S.-Central Asia Trade and Investment Framework 

Agreement and through technical assistance. 

Conclusion 

We have made progress on enabling countries in Central Asia to bring their energy resources to world markets. Much remains to be done, however, and continued 

robust U.S. engagement is required to push forward the next phase of energy development and provide the political space for the countries of the region to pursue their 

national self-interests. Security will continue to be a challenge. And continued 

progress in Afghanistan and a lessening of narco-trafficking will contribute materially to the stability and security of governments in the region and will help to erode 

the foundations of fundamentalism and terrorism. 

Thank you for allowing me this opportunity to appear before the Subcommittee 

on this important subject. I will be happy to take your questions.

Ms. ROS-LEHTINEN. Ms. Ekimoff. 

STATEMENT OF MS. LANA EKIMOFF, DIRECTOR, OFFICE OF 

RUSSIAN AND EURASIAN AFFAIRS, U.S. DEPARTMENT OF ENERGY 

Ms. EKIMOFF. Thank you, Madam Chairwoman and distinguished Members. I am pleased to appear before you to discuss 

United States energy interests in Central Asia and the Caspian 

and the Department of Energy’s and the Administration’s efforts to 

enhance our energy cooperation in this region. 

There is a great deal of progress to report on our cooperation, but 

there are still challenges to face. I will focus on the opportunity 

that Central Asia presents for enhancing energy security by adding 

supply and diversity to world markets and by also supporting economic growth and political stability in the region. 

The countries in this region run the gamut on energy wealth. 

Azerbaijan, Kyrgyzstan, Turkmenistan and Uzbekistan are endowed with oil and gas resources. Tajikistan and Kyrgyzstan are 

resource-poor except for hydropower. These countries provide 2 million barrels of oil per day to the global market and are expected 

to add 4 million barrels by 2010. Their gas production is expected 

to increase by 60 percent in 2010. 

11

However, the full resource potential of this region is still unknown, and reserve figures vary widely. Better data will become 

available as more exploration takes place. 

United States engagement with Central Asia and Caspian oil 

and gas producers has public and private components. Western and 

U.S. companies have been active in this area, and there have been 

substantial investment successes. 

As Ambassador Mann noted, U.S. companies are involved in 

some of the largest projects in this area, as well as in developing 

new pipeline projects. In addition to adding to global energy supplies, development of these projects has created thousands of jobs, 

resulted in training the domestic labor force, provided access to 

technology, increased commitment to environmental protection and 

led to the establishment of small- and medium-sized businesses. 

Countries in this region are now empowered with opportunities and 

moneys to develop their economies and become more self-reliant. 

Developing resources in this region is not without obstacles. 

There is a lack of export outlets, and we have supported the development of new transit projects, as the Ambassador indicated. 

Our goal is to promote regional partnerships among producing 

and transit countries. It is important that the countries take responsibility for encouraging the development of new, commercially 

viable export routes and find ways together, and with commercial 

entities, to create a win-win situation. We also consistently support 

the creation of sound legal, fiscal and regulatory policies that will 

encourage investment in the energy sector as well as support economic growth. 

The Department of Energy maintains ongoing dialogues with officials from Kazakhstan and Azerbaijan. Energy Secretary Bodman 

recently visited Kazakhstan, where he met with President 

Nazerbayev and the energy minister. He and Deputy Secretary Sell 

recently met separately with Azerbaijani President Aliyev in Washington and Istanbul. Their discussions focus on advancing our energy cooperation and recognizing the important role it plays in the 

global energy market. 

The Department has formal dialogues with both countries. As 

these bilateral dialogues have matured, we have changed the focus 

from oil and gas issues and expanded our cooperation to a broad 

range of technologies—energy efficiency, renewable power, nuclear 

power and environmental concerns. It is important that these countries understand that we are not just interested in their oil and gas 

contribution to global markets, but also share a common goal of 

building an energy sector in these countries that is diversified, 

cost-effective and secure to support their growing economies. 

What are our next steps? We will continue to work with countries in the region to facilitate the development of commercially 

viable oil and gas export infrastructure. We will encourage more 

surveys to better understand the resource potential in the region, 

which will help attract investment. We support the full involvement of Kazakhstan and the BTC pipeline, now that Azerbaijan 

and Kazakhstan have completed an intergovernmental agreement 

and they begin negotiations on host government agreements with 

the companies. 

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We also support the development of hydropower resources in the 

area, for domestic use as well as for markets in South Asia, including Pakistan and Afghanistan, enhancing the North-South energy 

export corridor. We also plan to hold formal energy dialogues this 

fall in Kazakhstan and Azerbaijan to broaden and deepen our energy cooperation. 

Finally, we remain committed to these countries to build a longterm, strong partnership that will strengthen the countries and the 

regions economically and politically. 

Thank you for your attention. I will be pleased to answer any 

questions. 

Ms. ROS-LEHTINEN. Thank you so much. 

[The prepared statement of Ms. Ekimoff follows:]

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Ms. ROS-LEHTINEN. Thank you to both of our panelists for being 

here today. We will begin a round of questions with Congressman 

Ackerman. 

Mr. ACKERMAN. Thank you very much, Madam Chair. 

Secretary Mann, your statement notes that we must now press 

on with the second phase of supporting new energy routes out of 

Central Asia. Could you outline for us what those routes might be 

and what the various implications would be of the proposed routes? 

Ambassador MANN. Yes, sir, I am happy to do that. 

If I can just take you back a short bit, the fundamental problem 

that faced the new states at the time of independence was that 

they had enormous oil and gas reserves and that, as they developed 

the reserves with the help of Western companies, they needed a 

way to export it. That is what CPC, BTC and some other smaller 

pipelines have done. 

Now, as they look toward the development of new reserves, especially Kashagan in Kazakhstan, there is need for additional capacity. So one thing—in oil terms, one thing that the companies and 

countries are looking at is expanding the flow of Kazakhstan oil 

across the Caspian and into the BTC system and perhaps by other 

export routes to the Black Sea and the Mediterranean. 

As Ms. Ekimoff mentioned, the agreement that Kazakhstan and 

Azerbaijan have just signed is an important step toward making 

that oil transit much more efficient and, I think, competitive. 

In terms of gas, the United States has long supported new gas 

export routes out of Central Asia, including a trans-Caspian pipeline. Now, regrettably, in 2000–2001, the Government of 

Turkmenistan did not move ahead with a very attractive, feasible 

proposal to build such a pipeline. But it is our belief that a transCaspian gas pipeline would be an attractive, commercial option for 

the Central Asian producers. 

The United States also has long supported new pipeline routes 

from South Central Asia to South Asia. A number of those are 

under study, and as with all of the pipelines a key point of the 

United States policy is that they must be commercially feasible, so 

that is an important consideration in all of this. 

Finally, if I may say, as well, just to remind you that as a matter 

of law and policy, we remain firmly opposed to any pipelines involving Iran, and we continue to make this strong opposition 

known to these Central Asian states. 

Mr. ACKERMAN. If I could follow up, also in your statement, you 

discussed the lack of limitation agreements in the Caspian Sea, 

chiefly because of the delay on the part of Afghanistan and 

Turkmenistan. Why have both of these nations been dragging their 

feet on this question? And wouldn’t it be in both nations interest 

to reach an agreement so that hydrocarbon resources could be exploited for future profits? 

Ambassador MANN. Yes, I think you are absolutely right on that. 

Kazakhstan, Azerbaijan and Russia have reached agreements, I 

think in a very professional fashion, that deserve our admiration. 

Now, with Iran, Iran has a methodology that no other nation in 

the Caspian supports. Iran says, There are five of us; let us divide 

it five ways, and we get 20 percent. That is not accepted by any 

of the others. 

27

Turkmenistan also uses a methodology that the other four do not 

accept, and it is a methodology that, if followed, moves the 

Turkmen border very far to the west into areas that Azerbaijan is 

already exploiting. 

Now, the United States’ position on this has been to say, we support any methodology that the five come up with that is done 

peacefully, that is done by mutual agreement. We have offered on 

a number of occasions our technical assistance and our legal experts to the Azerbaijani and Turkmen Governments to help those 

two countries, in particular, reach an agreement and it is an offer 

that still stands. But so far, regrettably, in the north part of the 

Caspian there has been a delimitation agreement, but we are not 

seeing that with Iran and Turkmenistan. 

Mr. ACKERMAN. Ms. Ekimoff, you state that Central Asian-Caspian production of oil will reach 4 million barrels a day by the year 

2010, and that gas production will likely double to 24 billion cubic 

feet per day in that same year. 

How do these increases compare with expected increases and demand for oil over the next 4 years? And does increased demand 

equal increased production, or is one greater than the other? 

Ms. EKIMOFF. I have to say that I don’t have the specific data 

on what the trends are for increased demand, but certainly, for example, in the world, about 80 million barrels of oil per day is produced; and this, while a small amount, does contribute to the diversity of supplies, and it does enhance the production in that area 

and make these countries important to world—to the global oil 

market. 

But I can provide you with some more details on that. 

Mr. ACKERMAN. Your statement also discusses at some length 

the Baku-Tbilisi-Ceyhan pipeline, and while we are all pleased 

about the prospect of Central Asian oil and gas getting out of the 

region without involving either Russia or Iran, I wonder if you 

would discuss how Armenia fits into any future definitions of the 

pipelines to the West. 

Ms. EKIMOFF. There have been some efforts to work with Armenia. However, it still is a political issue, which I would hope Ambassador Mann can shed some light on, where these pipelines are 

much more efficient and effective going through Georgia and Turkey. 

Ambassador MANN. I would just be happy to add a word on that, 

since I was involved in the Karabakh negotiations for these past 

few years. 

In looking at the pipeline bending around Armenia, I think it 

comes back to a point I made in my previous answer, which is that 

the United States Government supports the private sector in building these lines, and as such, we don’t tell the countries where to 

put their investment. 

In the BTC case, the companies reached the judgment that they 

did not want to put $14 billion in investment at risk and bet on 

a piece between Armenia and Azerbaijan. As a result, being riskaverse in that sense, they thought the safer course was to take a 

more expensive construction route, but nevertheless, bend around 

Armenia, as long as the two nations are at war. 

28

So, it was a commercial decision that gave the BTC pipeline that 

shape, and it was the investment calculation of the consortium. 

Ms. ROS-LEHTINEN. Thank you. 

Mr. Carnahan. 

Ms. Berkley. 

Ms. BERKLEY. First of all, I want to thank you very much for 

being here. This is a part of the world that, until recently, I knew 

so little about and now realize how strategically important it is to 

our country and, I believe, security in many very sensitive parts of 

the world. I have also come recently to appreciate how vast their 

oil and gas reserves are, and how extraordinarily important that is 

to our economic well-being and security needs. 

Let me ask you, if I could, and I guess this is Central Asia Primer 101, but can you give me some idea of perhaps collectively, although I am sure each nation is different and unique in its relationship with the Russians, the Iranians, the Chinese—where we 

fit into this? 

What would their natural inclination be as a region? Would they 

gravitate toward Muslim countries? Would they be more interested 

in coming into the American orb and being stronger allies of ours? 

Are these issues being determined by their governments on pure 

economic basis? Are they factoring in other security needs, religious 

needs? 

Give me some idea of what is happening there and what is the 

best-case scenario for the United States and how we can go about 

achieving that scenario. Because, lately, we are not doing well 

achieving any best-case scenario anywhere in the world. 

So, if you can share some of your knowledge with me, I would 

be very grateful. 

Ambassador MANN. Thank you, Madam Congresswoman. As a 

first point, I strongly encourage you to travel to the region. 

Ms. BERKLEY. Well, the Ambassador from Kazakhstan was recently in Las Vegas, and I hosted him there. 

Ambassador MANN. How did that work out there? 

Ms. BERKLEY. Let us say it was an eye-opening experience for us 

both. 

Actually, we had a lot in common, because of the nuclear nonproliferation issues and gaming issues, interestingly enough. I am 

very anxious to go to Kazakhstan. 

But I am planning to go, I can’t go this year, but I am hoping 

to go next year when it is warm in Kazakhstan. Frozen tundra and 

Vegas don’t work too well for me. 

Ambassador MANN. Kazakhstan is a good friend of the United 

States, so I am glad you had that conversation with the Ambassador. 

Overall, there is a powerful Soviet imprint. The countries were 

Soviet republics for 70 years. Russian, in those years, was the language of the educated, the language of the elites. There is a powerful Soviet legacy, also an infrastructure, not just in oil and gas 

pipelines, but the rail routes, the air routes, telecommunications, so 

much of it still links through Moscow and the Russian heartland. 

That is a fact that just exists in Central Asia. 

Now, what the countries have said to us in so many ways is, 

well, we have greater opportunities now. We want not merely to be 

29

a part of the USSR as we were, we want to link to the global economy. 

The United States, in so many ways, has done this; not to create 

a sphere of our own, we reject that approach. But what we believe 

very strongly in is working with the governments and the people 

to strengthen their independence, strengthen their decision-making 

autonomy, strengthening their sovereignty and assisting in a process of stable development. 

One of the other aspects of this Soviet legacy was a forced atheism on the countries that had been Muslim for so many centuries. 

What we have now in Central Asia, fundamentally, are secular 

governments. So I think that is what they are left with after those 

Soviet years. 

There are, in positive terms, in these countries, a powerful pool 

of extraordinarily talented young people who, given the chance, can 

do a great deal to reshape and develop these societies. 

Let me make one plug here for the American exchange programs 

for high school and university students, that the Congress has supported for many years, and I think they give an extraordinary payoff in what they are trying to do in terms of development. 

So, yes, there is a powerful Soviet legacy but the United States 

is working with the countries to try to develop new options, and 

also—and Secretary Rice is particularly interested in this—seeing 

what possibilities there are to support links between Central Asia 

and South Asia. She has reorganized the State Department bureaucratically to make us more effective in our efforts; and generating or supporting these new infrastructure links is something 

that is a special concern in the Department of State right now as 

well. 

Ms. EKIMOFF. I just wanted to add, as I mentioned, I think, part 

of our dialogues have been to broaden the energy discussion, including to talk about areas like energy efficiency, where these 

countries have a lot to gain, as well as to look to other kinds of 

resources like renewable energy. 

I know Kazakhstan is considering developing a nuclear industry, 

so that we can share our experiences, both good and bad, and help 

them become more independent, and also to use their resources, as 

they see as maybe more of an export commodity, and to become 

more efficient in their own use of energy. 

Ms. BERKLEY. What can the United States Congress do to further 

the efforts and help strengthen the links between the United 

States and Central Asia? 

We are holding a hearing, listening to what you have to say. 

After we leave here and I go to my next meeting, is there anything 

we should be doing? 

Ms. EKIMOFF. One of the things I would like to mention, as I 

think Ambassador Mann has mentioned, I think it is important for 

the countries to understand our system and, for example, what the 

legislative process is. Certainly sharing your experiences and how 

to develop rules and regulations is very important to them. They 

just don’t understand. 

It would be interesting to hear the challenges that you face as 

legislators, as well as some of the good opportunities that you have 

30

and certainly any support that we can give in developing programs 

in these countries for energy efficiency. 

And exchange programs, too, are critical here, so that they can 

come and visit our labs and understand about how our technology 

works. It all adds to their understanding and ability to take on new 

projects. 

Ambassador MANN. What I would say is that just looking at the 

map, Russia, China, Iran are very close to Central Asia. It is very 

easy for their officials to travel. 

We are far away, so to the degree that you and other Members 

can make an effort to go out there to engage with the officials, I 

think that is a highly desirable thing. 

The other thing that I would note is that everything that we as 

a Government achieve, we achieve through a handful of Embassies 

and personnel in very difficult and remote locations. So the support 

that the Congress gives in every way for our operations out there 

really has an enormous payoff in every issue that we handle. 

Ms. BERKLEY. Thank you. 

Ms. ROS-LEHTINEN. Payoff, you are speaking her kind of language here. 

Ms. BERKLEY. I am seeing big casinos in Kazakhstan. 

Ms. ROS-LEHTINEN. What goes on in Kazakhstan stays. 

Let me ask you about your thoughts on continued military assistance in Kazakhstan and Azerbaijan. Do you believe that it is a priority to help these two countries strengthen their capabilities so 

that they can independently defend the Caspian Sea energy platforms and interest? 

In my last question, I wanted to ask you about Iranian influence. 

You had talked about how close geographically these countries are. 

To what extent do you believe that the embrace of the Iranian 

regime in Shanghai implies a degree of legitimacy for and a Russian and Chinese acceptance of Tehran’s current policy? So, Iranian 

influence and also the United States military assistance to 

Kazakhstan and Azerbaijan. 

Ambassador MANN. Madam Chairwoman, in each of those two 

countries, I think we have a good program of military cooperation 

and training; and a good part of that is strengthened at precisely 

that issue you have identified, Caspian security. It is not Central 

Asia per se, but I will say that I know it is a concern for Azerbaijan, which, in the summer of 2001, had oil field workers chased 

off of the Alov deposit by an Iranian gunboat. So it is a lively concern for the Azerbaijanis. 

So we are in there. I know our command and European Command really has been devoting attention to this. We have programs 

of IMET with each country. So I do think, yes, it is very important. 

On the Iranian question, again, I am not an Iranian specialist 

myself. But from spending much time in Central Asia, I think the 

model of Iranian theocracy holds no appeal for the Central Asians, 

and I will just keep it simple and leave it at that. It is something 

that we watch; it is something that we are aware of, something we 

engage in dialogue with. 

Also, we realize that certainly for a country like Turkmenistan, 

Iran is a neighbor, that is a fact of life, and they have to find some 

type of workable relationship with the Iranians. That said, we are 

31

very candid and straightforward both in our policy concerns about 

Iran when we talk to the Central Asians and very straightforward 

about the demands of United States law with regard to the Iran 

sanctions. 

On SCO, on Shanghai Cooperation, whether observer status implies legitimacy, I think certainly to see the role that Iran would 

hope to play in SCO is not a helpful one; I would prefer not to 

reach sweeping generalizations about what it means that Iran is 

attending these meetings, but to focus instead on what actually 

comes out of the meetings themselves. 

So to the degree that Shanghai Cooperation Organization focuses 

on the practical issues of antiterrorism, of narcotics trafficking, of 

development issues, things like that, then that is not a bad focus 

for the organization. If, as in the 2005 SCO statement, it goes beyond that, then it is less helpful. 

So I think we try and look at the concrete issues and the concrete actions. 

Ms. ROS-LEHTINEN. Do you have anything to add? 

Ms. EKIMOFF. No. Not my area of expertise, so I will leave it up 

to Ambassador Mann. 

Ms. ROS-LEHTINEN. That never stops us. 

Thank you very much. Excellent testimony and wonderful answers to our questions. Do you have any follow-ups? 

Mr. ACKERMAN. Thank you very much. 

Ms. ROS-LEHTINEN. Thank you, thank you to both. 

I would like to introduce our private panel now. 

Zenyo Baran joined the Hudson Institute as Senior Fellow and 

Director of the Center for Eurasian Policy in April, 2006. From 

January, 2003, until joining Hudson, Ms. Baran directed the International Security and Energy program at the Nixon Center. 

Through writing seminars and briefings, she helped American policymakers and opinion leaders to understand the Eurasian region’s 

political, economic and social dynamics and the United States interests served by an effective partnership with key allies. 

From 1999 through December 2002, Ms. Baran worked as a Director of the Caucasus Project at the Center for Strategic Studies. 

She received her M.A. in international economic development and 

B.A. in political science from Stanford. 

Steven Blank is a professor of National Security Studies at the 

Strategic Studies Institute of the U.S. Army War College. Dr. 

Blank has been a professor of national security affairs at the Strategic Studies Institute since 1989. In 1998 to 2001, he was the 

Douglas MacArthur Professor of Research at the War College. Prior 

to this appointment, Dr. Blank was associate professor for Soviet 

Studies at the Center for Aerospace Doctrine Research and Education at the Air University of Maxwell Air Force Base. 

Dr. Blanks’ M.A. and Ph.D. are in Russian history from the University of Chicago. He has published over 500 articles and monographs on Soviet Russian, United States, Asian and European military and foreign policies, and his most recent book is Russo-Chinese 

Energy Relations: Politics in Command, 2006. 

Then we will hear from Dr. Ariel Cohen, who began working for 

the Heritage Foundation in 1992, Dr. Cohen earned his Ph.D. at 

the Fletcher School of Law and Diplomacy at Tufts University, 

32

served as a consultant to both the Executive Branch and the private sector on policy toward Russia, Central and Eastern Europe; 

and he participates in an ongoing study, ‘‘Russia, 2025,’’ conducted 

by the World Economic Forum. 

He is often called on to testify on Russian and former Soviet politics, economics and law, and provides commentary on Russian and 

Eurasian affairs. He was a weekly contributor to the Voice of 

America radio and TV programs for 8 years. 

Then we will hear from Robert Ebel, who is currently chairing 

the Center for Strategic and International Studies Energy program, 

and provides analysis on world oil and energy issues with particular emphasis on the former Soviet Union and the Persian Gulf. 

He is also codirector of the Caspian Sea Oil Study Group program 

and the Oil Market Study Group. 

In addition, he has directed studies on global nuclear material 

management and the geopolitics of energy. 

Mr. Ebel served with the CIA for 11 years, and has spent over 

7 years with the Office of Oil and Gas in the Department of Interior. He also served 14 years as Vice President at a corporation. 

He has traveled widely in the former Soviet Union, led an international energy agency team, examining oil and gas sector, participated in the Sudanese peace talks in Kenya, worked with Iraqi oil 

officials and is a past chairman of the Washington Export Council 

and a past member of the board of the American Near East Refugee Aid. 

He is author of many books on energy issues and is a frequent 

commentator on many of these issues. He has a Master’s from the 

Maxwell School at Syracuse, a Bachelor’s in Petroleum Geology 

from Texas Tech, and in 2002 he received the Department of 

State’s Distinguished Public Service Award. 

A very great panel. Thank you very much. 

Ms. Baran, we will begin with you. 

All of your statements will be made part of the permanent 

record. Feel free to summarize. 

STATEMENT OF MS. ZENYO BARAN, DIRECTOR, CENTER FOR 

EURASIAN POLICY, HUDSON INSTITUTE 

Ms. BARAN. Thank you, Madam Chairwoman, for the opportunity 

to appear before you today. I am glad to participate in such a timely and critically important hearing. 

I will focus on three key themes: First, securing United States 

energy interests in Central Asia; second, the importance of forging 

a mutually beneficial strategic partnership with Kazakhstan; and 

third, countering anti-American developments within the SCO; and 

then end with a few recommendations. 

On the United States energy interests in Central Asia, I think 

we see Central Asia energy infrastructure and resources once again 

becoming a source of competition for great powers. 

In this new rush, the two most important regional players are 

China and Russia. Energy-hungry China is actively working to 

reach long-term oil and gas agreements, and has billions of dollars 

to spend in order to obtain them. Russia is also spending considerable sums in the region in order to ensure it can maintain its monopoly over Caspian gas transportation to Western markets. 

33

With all respect to the previous panelists, I would like to say the 

U.S., however, is missing in action. In the 1990s, the United States 

had a very successful Caspian energy policy and identified the region as an important non-OPEC source of oil. The United States 

policy also correctly identified the direct transportation of Central 

Asian gas to new markets, rather than via the Russian monopoly 

Gazprom network or through a potential Iranian pipeline, as the 

best strategy for the region’s energy transportation future. 

To this end, the United States has already supported several 

non-Russian and non-Iranian oil and gas pipelines from the Caspian Sea, one of which, as we just heard, the Baku-Tbilisi-Ceyhan 

oil pipeline, was just recently inaugurated. Securing the East-West 

flow of Caspian gas has been much more difficult and, so far, efforts have not been successful. 

Russia clearly won the first round of Central Asian gas competition. While the United States backed a trans-Caspian gas pipeline 

to transport Turkmen gas via an undersea pipeline to Azerbaijan 

and, from there, via Georgia, Turkey and onwards to European 

markets, Russia was able to finalize a gas pipeline agreement with 

Turkey to send its gas via Turkey via the Blue Stream gas pipeline 

underneath the Black Sea. 

In part, because of the authoritarian rule of Turkmen President 

Niyazov until recently, the United States had abandoned its Central Asian gas strategy. The standard arguments were that the 

U.S. should not engage in energy dialogue with Niyazov until and 

unless he made improvements to the democracy of the human 

rights situation in the country. Given that he is not likely to do so, 

it was deemed best to wait him out and begin energy talks with 

his successor, no matter how far in the future. 

This policy was clearly not working. In fact, while the United 

States waited, we see the Chinese and the Russians have moved 

in to fill the vacuum. More recently, the trans-Caspian gas pipeline 

idea was revived by the United States Administration, but this 

time starting with Kazakhstan. 

According to the new strategy, Turkmen gas will be added only 

later if at all. The logic is that there is already plenty of flared gas 

in Kazakhstan that could be transported to Western markets. 

Given Kazakhstan’s pragmatic energy development policy and demonstrated interest in the East-West corridor, this option seems to 

be a good way forward. 

Yet, this too may not materialize unless the United States is seriously committed to changing the energy dynamics in Eurasia, 

which ultimately means confrontation with Russia’s regional energy strategy. To come up with a coherent and pragmatic strategy, 

it is necessary to look at the broader Eurasian energy picture, specifically at the activities and plans of Gazprom. 

While many have wanted to turn a blind eye to the possibility 

that United States and Russia may not have a win-win option in 

Central Asian energy, it is clear that Russia is playing it all. I 

won’t go into the details of the dynamics of the Central Asian gas 

issues, as it is in my testimony, but I would say, following Vice 

President Cheney’s visit to Kazakhstan in May, we have seen a renewed interest in Turkmenistan and Kazakhstan to engage and 

work with the United States on the trans-Caspian gas pipeline. 

34

Without United States support, however, they are probably going 

to give in to Russia, and therefore, it is important to support them 

while they are still interested in working with U.S. 

Now, my second point is the importance of forging a mutually 

beneficial strategic partnership with Kazakhstan. As we heard, 

Kazakhstan is a very significant oil and gas producer in the region. 

It is also a key ally of America’s, and even though the U.S. has 

taken this alliance for granted, it has stood by United States interests, which have been aligned with Kazakh interests. 

But for Nazerbayev, President of Kazakhstan, to keep his country in close alliance with the United States at a time when antiAmericanism is on the rise even in Central Asia, and when China, 

Russia and Iran, to differing degrees, are trying to push the United 

States out of the region, he must be able to demonstrate that 

Kazakhstan’s contributions and achievements are being noted and 

awarded, and that a mutually beneficial strategic partnership will 

be reached by the time of his visit to Washington this September. 

On countering anti-American developments at the SCO, I would 

say, despite public denials by the SCO Co-Chairs Russia and 

China, that the organization is not an anti-American alliance, facts 

on the ground indicate that it is indeed moving in that direction. 

These sentiments are a by-product of two factors, first, competition for energy resources with China and Russia, competition with 

Russia over the construction of new pipelines, and second, the perceived American promotion of democratic revolutions throughout 

the region. While its partners all have shared security concerns 

about the so-called three evils of separatism, terrorism and radicalism, it is of course ironic that Russia and China seem to disregard the longer term impact of their anti-American stand in Central Asia. By opposing the U.S. the way they do, they are effectively bolstering the position of the Islamists. 

The U.S. needs to work with its allies within the SCO to ensure 

this organization will not become an alternative alliance to NATO 

or other major international political military alliances. To accomplish this, the U.S. and the EU need to recognize once and for all 

that the real threat to region stability is posed by the Islamists and 

terrorists so that SCO is not the only international body active in 

this area. 

Now to conclude, for the United States to ensure its energy and 

security interests in Central Asia a new framework is needed. In 

the short term the U.S. will not have much influence in the democratic reform process in the region. The carrots the United States 

and EU can offer the Central Asians will simply not be attractive 

enough for them to bite, while the sticks the West can use will not 

be painful to induce change. 

We need to recognize also that there is no win-win strategy possible with Russia and Central Asia regarding energy given the 

Kremlin’s use of energy as a political weapon and Gazprom’s need 

to obtain as much of the Central Asian gas as it can to keep Russian domestic gas prices low and to provide uninterrupted gas supply to its European consumers. 

The United States has two options, it can either give up, which 

is not advisable, or it can become directly engaged at the top levels 

35

on this issue, just as the Russian Government has done throughout 

the last several years. 

To devise an effective energy strategy for Central Asia, dynamics 

in the Caucasus, Black Sea region and the EU markets must be 

considered. We know from last year’s gas cutoff to the Ukraine 

there is a direct link between Central Asian gas and Europe’s own 

energy security. The markets are indirectly connected, but it would 

be benefited by a direct connection. 

To accomplish this, the United States has to work together with 

the EU and be more effectively involved in the success of post-revolutionary Ukraine and Georgia as well. 

Second, while Kazakhstan is a natural strategic partner for the 

United States and while this relationship clearly needs to be nurtured and strengthen, the United States cannot succeed in Central 

Asia by relying on one country alone. It has to find a way to cooperate with Turkmenistan on energy and with Uzbekistan on security. 

Thank you. 

[The prepared statement of Ms. Baran follows:]

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Ms. ROS-LEHTINEN. Thank you so much. 

STATEMENT OF STEVEN BLANK, PH.D., RESEARCH PROFESSOR OF NATIONAL SECURITY AFFAIRS, U.S. ARMY WAR 

COLLEGE 

Mr. BLANK. Madam Chairwoman, Members of the Subcommittee, 

it is a great honor to testify before you again on United States interests in Central Asia and the challenges to them. In deference to 

my colleagues’ expertise on energy I am going to concentrate on the 

framework of security, of which energy is part, because our efforts 

to achieve the security and stability of Central Asian states, which 

as Under Secretary Armitage said in 2004 is in the vital interest 

of the United States, is related to providing them with the assistance they need to gain energy independence. 

Today American interests in Central Asia, a region of growing 

strategic importance, are under attack from three sources: Russia, 

China, the authoritarian misrule of the Central Asian rulers themselves in many cases, and thirdly from the resurgence of the 

Taliban in Afghanistan, because if we lose in Afghanistan and victory there is the only option for us, then we will be facing another 

terrorist upsurge like we did 5, 7 years ago which will threaten all 

of Central Asia. 

Because the security of Central Asia has become connected to the 

vital security interests of the United States, our presence in Central Asia in all of its dimensions, economic, military, political and 

so on, is regarded by Moscow and Beijing and to a lesser degree 

Tehran as a threat to their vital interests and they have spared no 

effort to try to oust us from Central Asia. 

Russia, as has been noted here, has attempted to create a gas 

monopoly. They failed to created an oil pipeline monopoly, but the 

gas monopoly is vital to Russian politics in general. Indeed, without the gas monopoly, as Ms. Baran’s testimony indicates, the political economy of the current Russian regime would be forced into severe alteration and reform. Therefore, an American policy of Central Asia has knock-on effects of reform that are important not just 

in the region itself but beyond. 

Furthermore, the Russian attempt to create a political and military and economic monopoly in Central Asia embraces efforts to 

create a security bloc through the Collective Security Treaty Organization and in conjunction with China through the Shanghai Cooperation Organization. While members of the SCO disagree as to 

what its main focus ought to be, there is nonetheless concern, as 

reported, for example, in today’s New York Times, that the SCO 

might evolve into a kind of anti-NATO bloc. 

It is by its charter a collective security organization already and 

its members have already participated in joint exercises. So there 

is a certain amount of pressure to do that. 

At the same time the Russians have their own military bloc, the 

CSTO, which I alluded to, and they are also trying to exclude us 

from the Caspian by creating what they call a CASFOR, a naval 

force under Russian domination that would exclude nonlittoral 

states from any participation in the defense of the area, defense of 

world platforms, counter-proliferation and counter-smuggling operations. 

50

We have a major stake not only in the stability and security of 

these states but also in helping them achieve more liberal and 

more democratic results over time in terms of their economics and 

politics, and they can only do that if they are free to choose among 

diversified pipelines, diversified customers for their main products, 

which in this case is energy. 

That is also true, for example, for states not commonly thought 

of as major energy producers like Uzbekistan. Uzbekistan does 

produce a fair amount of gas and oil, enough to support itself and 

export some, but it is a major cotton and copper producer and to 

the extent they have a market beyond Russia and China, they have 

opportunities to deal with other states and export those goods and 

participate more in the global economy and less in a closed bloc. 

Now the impact, therefore, of American policy has to be felt 

across the border; it has to be felt with regard to what has been 

called the war of ideas, where we have been frankly AWOL, where 

we do not have an information policy that counts as Russian propaganda says we are sponsoring revolutions in Central Asia. 

We need a broader economic policy than simply ensuring energy 

access. While we have been successful in energy access with regard 

to oil in Kazakhstan, we have failed with gas and we need to get 

on the ball with all the other major items involved. 

Secretary Rice’s initiative with regard to linking up South Asian 

and Central Asian electricity networks is a commendable example 

of what needs to be done, but it needs to be thought of in terms 

of a comprehensive economic policy involving not just the United 

States Government but the EU and international financial institutions. Similarly, military assistance and training through the Partnership for Peace and getting our allies’ support in Afghanistan, 

and the situation in Afghanistan is quite critical at the moment, 

is also an essential aspect of policy because if we fail in Afghanistan we put the whole of Central Asia at risk. 

So in conclusion I would like to say that we are facing a coordinated attack on our policies in energy with regard to democratization, with regard to defense and security in Central Asia from Moscow, Beijing and to a lesser degree Tehran, as well as from the 

Taliban in Afghanistan and their supporters, and also facing obstacles due to the authoritarian misrule or fragility of several, if not 

all, of the Central Asian Governments. 

This makes the obstacles to our policy quite considerable in their 

extent and scope, but because of the fact that Central Asia is so 

important strategically and in energy terms, it is essential that we 

find and devise policy mechanisms and frameworks which will enable us to overcome those challenges in the near and long-term future. 

Thank you. 

[The prepared statement of Mr. Blank follows:]

PREPARED STATEMENT OF STEVEN BLANK, PH.D., RESEARCH PROFESSOR OF

NATIONAL SECURITY AFFAIRS, U.S. ARMY WAR COLLEGE

Madam Chairwoman, Members of the Committee, it is a great honor to be invited 

once again to testify before you on U.S. interests in Central Asia and the challenges 

to them because Central Asia is an area whose importance to the United States is 

universally acknowledged to be growing. In 2004 Under Secretary of State Richard 

Armitage told Central Asians that ‘‘stability in the area is of paramount importance 

51

and vital national interest.’’ Yet today American interests are under attack from 

three sides in Central Asia: Russia and China, the Taliban and their supporters, 

and the authoritarian misrule of Central Asian governments. While some of these 

attacks are or would have been unavoidable, others are due to shortcomings in our 

own policy. I hope to address these deficiencies in our policymaking in recommendations for extricating ourselves from the present unhappy situation confronting the 

United States there. 

U.S. interests in Central Asia are primarily strategic. They derive first from the 

proximity of of this area to Russia, Iran, and China. Hence any U.S. presence in 

Central Asia is viewed by those states as a standing challenge, if not a threat, to 

their vital interests which in the Russian and Chinese cases are inherently imperial 

in nature and entail a diminution of the effective sovereignty of Central Asian 

states. Therefore it is not surprising that the paramount U.S. interest under both 

the Clinton and Bush Administrations has been to uphold the integrity, independence, sovereignty, and security of these countries against Russian and Chinese efforts to dominate them and circumscribe their freedom. In other words, energy access, though important, is not and should not be the primary driver of U.S. policy 

here. This policy of defending the independence, integrity, and security of these 

states extends the long-established vital interest of the United States in forestalling 

the rise of any Eurasian empire in either continent which could challenge us. And 

there should be little doubt that imperial success in Central Asia would only whet 

the appetite of the rulers in Moscow and Beijing for further extensions of their hegemonic aspirations. Certainly they have long discerned that a great power rivalry or 

competition for influence is rising. 

Since 9/11/2001 a second vital interest for the United States has appeared, namely defense of the United States and of Europe from Islamic terrorism personified by 

Bin Laden and expressed by the Taliban and their allies. Consequently victory in 

Afghanistan is an unconditional vital interest which must be achieved just as much 

if not more than as in Iraq. The other important interests of the United States apply 

first of all to what might be called an open door or equal access for U.S. firms in 

regard to energy exploration, refining, and marketing. To the extent that these 

states’ large energy holdings are restricted to Russia due to the dearth of pipelines 

or oil and gas, they will not be able to exercise effective economic or foreign policy 

independence. Therefore energy access on equal terms to our own and other Western firms relates very strongly to the larger objective of safeguarding these states’ 

independence, sovereignty, and prospects for secure development. 

Not surprisingly, the leitmotif of U.S. energy policy has been to foster the development of multiple pipelines and multiple links to outside consumers and providers 

of energy, including more recently electricity, with regard to India. The energy producing states here recognize that their secueity and prosperity lies in diversification 

of pipelines so here our interests and theirs are in harmony. At the same time we 

have also sought to prevent a Russian pipeline or overall energy monopoly from 

forming with considerable success in the oil market, while we have been much less 

successful with regard to natural gas. And simultaneously we have also sought to 

isolate Iran from Central Asian energy by urging states to build pipelines that bypass Iran and enforcing sanctions upon those states and firms who are trading with 

Iran. 

Examples of such pipelines that bypass Iran and Russia are the Baku-TbilisiCeyhan or BTC pipeline where we have urged Kazakstan to join it and to participate in the construction of a pipeline under the Caspian Sea; a projected 

Turkmenistan-Afghanistan-Pakistan or TAP line which may or may not be extended 

to India, or alternatively a potential pipeline using newly discovered sizable Afghan 

energy resources to the Subcontinent; and the recent attempt to link up together 

Central Asian and South Asian electricity networks. Indeed, U.S. and Western firms 

have been relatively successful in gaining access to Kazakstan’s oil fields in terms 

of contracts for exploration or refinery, and marketing. Finally we have a major interest in promoting domestic policies in all these states—the five former Soviet republics and Afghanistan—that will lead them over time toward democratization, 

open markets, open societies, good governance, and eventually as a result, to their 

lasting security against both internal and external challengers. 

Today all these interests are under attack and the U.S. policy in Central Asia is 

embattled and under siege. Moscow and Beijing, as well as to a lesser degree 

Tehran, view our political and strategic presence in Central Asia with unfeigned 

alarm. Despite their protestations of support for the U.S. war on terrorism, in fact 

they wish to exclude us from the area and fear that we mean to stay there militarily 

as well as in all other ways indefinitely. In this campaign Moscow has taken the 

lead with Chinese and Iranian support. Russia has sought with great success to establish a gas cartel under its leadership and prevent Central Asian states from sellVerDate Mar 21 2002 15:55 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6621 F:\WORK\MECA\072506\28967.000 HINTREL1 PsN: SHIRL
52

ing natural gas on the open market, thus perpetuating their backwardness, dependence upon Russia, and slowing their economic growth. It also has brought considerable pressure to bear upon Kazakstan, if not Turkmenistan and Azerbaijan, to desist from supporting the BTC pipeline or the idea of constructing a pipeline under 

the Caspian Sea. Such policies also lead, in both Russia, and the local regimes, to 

the consolidation of authoritarian governments that rely on resource rents to keep 

themselves in power, i.e. they are petro-states. Indeed, arguably the Putin regime 

could not survive in its present structure if it did not dominate Central Asian gas 

and oil sectors. Therefore American success in opening up those sectors has knockon effects in Russia beyond the more directly observable consequences of such liberalization in Central Asia. 

Russia has also waged a stubborn campaign to prevent Central Asian states from 

affiliating either with the U.S. or Western militaries. It seeks to gain exclusive control of the entire Caspian Sea and be the sole or supreme military power there while 

states like Kazakstan and Azerbaijan rely upon Western, and especially American 

assistance to help them develop forces that could protect their coastlines, exploration rigs, and territories, from terrorists, proliferation operations, and contraband 

of all sorts. Second, Russia has formed the Collective Security Treaty Organization 

(CSTO) to prevent local states from aligning with NATO or getting too involved with 

its Partnership for Peace (PfP) program. Another purpose of the CSTO is to create 

legal-political grounds for permanently stationing Russian forces and bases in 

Kyrgyzstan, Tajikistan, and possibly Uzbekistan ostensibly to defend these regimes 

against terrorism. And the CSTO, under Russian leadership is constantly seeking 

to augment the scope of its missions in Central Asia in order to cement a Russian 

dominated security equation there. So in reality these forces are there to defend 

Russian interests and/or keep the current authoritarian regimes in power. Despite 

Russia’s relative military weakness and unbroken military decline in 1991–2000, 

Russia now has bases in 12 of the former Soviet republics and the expansion of its 

capability to project power into these areas if not beyond is one of the leading drives 

of current Russian military policy. Similarly another key drive of Rusisan military 

policy is the effort to develop, sustain, and project the land, sea (Caspian), and air 

capabilities needed to prevent local governmetns form either receivnig U.S. weapons 

and assistance or allowing U.S. military bases in their territories. For example this 

program is the driving force behind Rusisa’s proposals for a Caspian Sea Force 

(CASFOR). The practical outomce of so exlcusive a force made up only of littoral 

states would be to confirm the littoral staes as dependencies of Russia, put Iran in 

a subordinate position in the Caspian, and exclude foreign military or energy presence there. 

Simultaneously, Moscow and Beijing have also waged an unrelenting campaign 

beginning in 2002 to impose limits on the duration and scope of America’s presence 

in Central Asian bases and more generally in the region. They succeeded in 

Uzbekistan thanks to our misconceived policies there and are constantly bringing 

enormous pressure on Kyrgyzstan to force us out of the base at Manas. Probably 

the combination of our deep pockets, high-level intervention by Secretaries Rice and 

Rumsfeld, and renewed fighting in Afghanistan has allowed us to stay at Manas on 

condition of paying ever higher rents for its use. Russia has also sought to forestall 

these states from buying Western equipment by selling them Russian weapons at 

subsidized prices. And in return for their debts it has sought to restore the Soviet 

defense industrial complex by buying equity in strategic defense firms located there. 

Russia and China have also engaged in training programs for Central Asian officers. 

Most significantly Moscow and Beijing have utilized the Shanghai Cooperation 

Organization (SCO) as a platform for a collective security operation in Central Asia, 

sponsoring both bilateral and multilateral Russian and Chinese exercises with local 

regimes and with each other on an annual and expanding basis since 2003. The 

SCO’s utility to Moscow and Beijing does not end here. While there are significant 

differences between Russia and China and among the other members and observers 

(India, Pakistan, Iran, Mongolia) as to what the SCO’s primary purpose and function ought to be, i.e. whether its main function should be promotion of trade and 

economic development; or to be a provider of hard security nd another energy forum 

that Russia would dominate; or to be a genuine basis for regional cooperation as 

Kazakstan and the smaller states would prefer, it clearly has been envisioned by 

Beijing and Moscow as a basis for attempting to unite Central Asian governments 

in an anti-American regional security organization. There are also divisions among 

the members as to whether its membership should expand to include the new observer states of Iran, Pakistan, India, and Mongolia. Nevertheless, Beijing openly 

and consistently proclaims the SCO to be a model for what it is trying to do in regard to Asian security in Southeast Asia and beyond, i.e. replace the U.S.-led alliance system in Asia with one of its own creation that is attuned to its rather than 

53

to our and our allies’ stated values and interests. Therefore we should take this organization and its development seriously as a template for China’s and Russia’s, if 

not Iran’s broader foreign policy objectives. 

Finally both Moscow and Beijing have waged substantive, comprehensive, and 

systematic efforts to undermine our presence in Central Asia due to our support for 

democratic reform. By doing so they also consciously strive to foreclose even the possibility of such reforms in Central Asia. Thus they have become stalwart champions 

of the status quo which includes massive corruption, repression, and the promise 

of sweetheart deals, if not promises of support for the current dictator’s chosen heir. 

Russia, China, and local governments have unceasingly advanced and disseminated 

the idea that the U.S. or the West in general were and are behind the so called 

color revolutions, and are attempting to overthrow local governments and replace 

them with supposedly more pro-American forces who have no domestic support. As 

local dictators tend to believe that they are irreplaceable, and that all opposition is 

external and terrorist in nature, this is an easy idea to sell. It is especially easy 

to sell this idea when it is backed up by a relentless state-run media campaign from 

Moscow, Beijing, and the local regime, and when there is no effective or coherent 

response, as was been the case with U.S. policy. Although there are reports that 

the U.S. has opened information centers in Kyrgyzstan and Azerbaijan and spent 

$43.7 million to do so, it is clear that this effort is still too little too late. Indeed 

it may fairly be said that we had and apparently still do not have no discernible 

public information policy in Central Asia or that we even took the idea of rebutting 

these charges seriously. Consequently we are now paying the price for our complacency and neglect. 

Thus U.S. policies in regard to security, energy access, and democratization are 

all under attack in Central Asia from the local dictators, Presidents Putin, and Hu 

Jintao, and their governments. Adding to the difficulties are the facts that we face 

a resurgent Taliban, backed up with enormous drug revenues, Pakistani support, 

and an inconsistent international effort to rebuild Afghanistan while its government 

remains weak and unsure of itself. As a result, we have lost the base at Karshi 

Khanabad, face constant pressure in Kyrgyzstan and elsewhere, and are fighting a 

revived and strengthened Taliban under conditions that are in many ways less favorable than in 2001. 

Uzbekistan evidently listens only to Moscow and Beijing and we are certainly not 

Kazakstan’s priority partner even under the best of circumstances. Therefore the 

State Department’s hope of relying upon Kazakstan as the strongest partner we 

have in Central Asia and as a potential leader for advancing the goals we wish to 

see there is fundamentally unsound and cannot serve as a basis for a successful 

U.S. policy in the future. Although Kazakstan has made numerous proposals for regional cooperation among the local governments and has occasionally stood up to 

Russia by selling gas to Georgia and joining the BTC pipeline, its calls for regional 

integration have gone nowhere and the limits upon it for independent action are 

quite clear. While it will continue to work with Washington on pipeline issues, accept foreign investment, continue to work bilaterally with Washington to obtain 

equipment and training for its self-defense in and around the Caspian, and take 

part in the PFP, we cannot expect it to be a leader in Central Asia against Moscow 

and Beijing. Neither should we ignore opportunities for engagement with all the 

other states. Any U.S. Central Asian policy must take advantage of every opportunity to interact productively with all of the local governments. 

Recommendations 

In order to regain our footing here we must first understand where we have gone 

astray. Our mistakes consist in shortcomings in our own policy processes and equally, if not more importantly, in our policies as seen in Central Asia. We cannot recover our position in Central Asia without addressing both sets of issues quickly and 

decisively. First of all, our policy process including the inter-agency process, with 

regard to Central Asia and many other issues is broken. We saw this in the uncoordinated response to the Andizhan massacre in 2005. The Pentagon, rightly, I believe, emphasizes our strategic interests in the region while the State Department 

emphasizes democracy as its main priority and invokes President Bush’s statements 

on the subject dating back to his second inaugural. 

While such statements make powerful rhetoric; in Central Asia, according to expert observers, they are empty and irrelevant. Moreover, they contribute to the undermining of our secueity objectives because they feed the belief that we are seeking 

to unseat reigning rulers, and seocnd, since they believe that the only real oppositon 

is Islajmic terrorists, our position fuels ther belief that we neither understand the 

region nor their intersts. If democratization is our first priority here than we have 

given the region over to Russia and China for we have convinced local leaders that 

54

these aforemntioned beliefs of thiers are correct whatever the real truth might be. 

And a Russian or Chinese dominated Central Asia is hardly compatible with any 

progress towards democratization. 

Second, this contradiction within our government implies to local elites that we 

are not serious about democracy. Moreover, and third, since we have steadily cut 

back on economic assistance to Central Asia, including Afghanistan and seem to 

have no visible economic policy for the area, we have also stimulated the belief that 

we will not stay the course and that this region means less to us than our previous 

rhetoric would otherwise imply. 

Fourth, our refusal until quite recently to address the issue of Afghanistan’s drugs 

has led to an explosion of the scourge of narcotics across Central Asia and reinforced 

the belief that we are not sensitive to local states’ real security interests and needs. 

Fifth, our utter lack of a viable information policy that is tailored to this region’s 

mores, cultures, and special needs, has reinforced all those previous negative feelings while also leaving the Russians and Chinese to operate with total freedom in 

support of retrogressive rulers or corrupt dictators. Sixth, we have failed to foresee 

what might happen in states that are so misgoverned that violence is likely, either 

through economic distress, or through a succession crisis. Thus our reactions have 

been uncoordinated and haphazard with resulting negative consequences for U.S. 

policy that we can all see today. Uzbekistan and Turkmenistan are likely to be 

failed states when the present rulers leave the scene and in Uzbekistan we have 

already seen, as has the Uzbek government, that it is vulnerable to both violent incitement and to outbreaks of pubic violence. 

We lost our position in Uzbekistan, not because of our championing of human 

rights but because we neglected to take it seriously, address its real problems, pay 

off Islam Karimov, its President, as we were doing in Kyrgyzstan, and because of 

the accumulated outcomes that are traceable to the aforementioned defects of our 

policy process. In 2004 Assistant Secretary of State Lorne Craner testified that, 

Central Asia has a major strategic importance for the United states and 

Uzbekistan inevitably plays a key role in our policy toward the region. It occupies, 

as we know, a core position in Central Asia. It has, by far, the largest population, 

and it is the guardian of a centuries long tradition of enlightened Islamic scholarship and culture. And it boasts the largest and most effective military among the 

five countries. 

Yet today due to our policy failures we have little or no dialogue with this state 

and formerly pro-American politicians like former Defense Minister Golunov, languish in jail because of their ties to the United States. These trends take place even 

though the recent successful removal of nuclear materials from Uzbekistan shows 

that such dialogue can be sustained if the issue is sufficiently vital. 

Seventh, NATO’s continuing dilatoriness about sending troops to Afghanistan and 

giving them sufficiently robust rules of engagement has slowed our ability to 

counter the Taliban resurgence, especially as we are reducing the number of troops 

there. Since it appears that more troops might be needed, this is again a wrong 

sign. Eighth, we have failed to press the international community sufficiently 

strongly to make good its pledges to Afghanistan, without which reconstruction 

there will be greatly prolonged if it even is successful. 

A successful policy must learn from these mistakes and surmount them. Therefore 

we must undertake the following steps. First, we must repair our broken policy 

process. The Administration must decide what Central Asia’s real importance is to 

the United States is and assign sufficient material and political resources to back 

up that investment. Toward this end the President and his cabinet members must 

impose policy discipline on the players after arriving at a consensus among themselves on these issues. They must establish clear and coordinated inter-departmental priorities for our emplacement in Central Asia and then proceed to implement them. In my opinion, the regional security and independence of these states 

must come first for otherwise no democratization is remotely conceivable. But this 

does not mean neglecting democratization as an issue. Rather we must engage both 

governments and civil society or opposition groups who are not terrorists. We must 

engage governments with the argument that they have signed international conventions upholding these practices and that we are not trying to supplant them, but 

rather ensure that their countries become both more secure and prosperous. Since 

their interest is at stake in a violent overturn, this argument may have some resonance. But it must be backed up by increased assistance and real economic and 

other policies that address their needs. 

In this connection it is essential that we continue and upgrade the series of highlevel visits by cabinet members and even Vice-President Cheney and reinforce those 

by visits by lower ranking officials on a regular basis to monitor policy implementation. It might also be useful to set up a governmental commission like the GoreVerDate Mar 21 2002 15:55 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6621 F:\WORK\MECA\072506\28967.000 HINTREL1 PsN: SHIRL
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Chernomyrdin commission on Russia or subsequent commissions of this sort to ensure regular progress by both sides in mutually consultative process that addresses 

common needs and projects. Likewise it is very important to come up with alternatives for regional association to Russo-Chinese projects. Reports of a projected association to fight the drug trade are therefore to be welcomed, not just because Russian analysts fear they signify an anti-Shanghai Cooperation Organization ploy, but 

also because they show we mean business with regard to Central Asian states’ real 

security threats. 

Similarly in this connection it is imperative that we find ways to reestablish a 

viable policy dialogue with Uzbekistan even if only begins at a low level. As I stated 

above, U.S. policy cannot omit any local government that wishes to cooperate with 

us on a mutually beneficial basis. Our cCentral Asian policy, to be successful must 

not only be multi-dimensional, it must be all-inclusive, i.e. it must include even 

Uzbekistan. If this cooperation or dialogue are built on a solid foundation, even at 

a low level, then they can enable us to talk to that regime on issues of shared concern and rebuild mutual confidence, for we know that President Islam Karimov fully 

understands the nature of whom he is dealing with in Beijing and Moscow. Even 

though he may wrongly feel he was betrayed by America, he cannot afford to become a total satellite of Moscow. Neither can we afford to let Uzbekistan fall into 

that trap especially as it might turn again to violence at the first sign of Karimov’s 

weakness or when he leaves the scene. 

Second, having decided upon our priorities and having begun to implement them 

we must also address NATO, the EU, and India, our new strategic partner in this 

area, to devise an agenda or agendas of common activities oriented to achieving the 

objectives that we all share and then work to fulfill those agendas whether it be 

in the five former Soviet republics or Afghanistan. This applies as much to the integration of energy and electricity links either to Europe or to India and Pakistan, 

as it does to sustaining the comprehensive recovery of Afghanistan and victory over 

the Taliban. 

Third, it is absolutely essential that the U.S. government quickly develop and put 

into practice a viable public information program using all the media at its disposal 

for Central Asia. This program must address itself to the cultural framework of the 

region and present the truth about American and other policies. We must also endeavor to retain and even open up every outlet available to us like Radio Europe 

Radio Free Liberty in order to get the word out about events affecting this area. 

Under no circumstances can we concede either to Moscow or Beijing, or to local dictators a total monopoly over the means of information. 

Fourth, we must devise rewards and punishments for those who would use the 

SCO as a means to eject us from Central Asia. This also means upgraded bilateral 

relations with local governments to strengthen them against Russo-Chinese pressures. While we obviously have a wide-ranging agenda with Moscow and Beijing; 

we should not give away these states’ interests in return for progress on other 

issues. For example, Washington and Moscow are about to negotiate on letting Moscow become a center for storing spent nuclear fuel and or for distributing it to states 

who wish to use it peacefully. While this can prove helpful with regard to Iran or 

even North Korea; behind it also lies Moscow’s desire to dominate the entire field 

of energy in Central Asia and deprive those states of any independence access to 

use the energy buried in their own territories. Therefore we must be careful in how 

we approach those two larger states. And as a general rule we must engage the 

states round Russia or China as much as we do Russia and China in order to prevent a successful neo-imperial policy in Central Asia or elsewhere for that matter. 

Fifth, we must continue to offer these states: Georgia, Azerbaijan, and Kazakstan 

in particular the resources with which to defend their sovereignty and territory 

independently of Moscow and Beijing if they so choose. We cannot allow Russia and 

Iran to turn the Caspian Sea into a closed sea for their own exclusive benefit or 

allow the CSTO and SCO to be the only game in town when it comes to the provision of security. Strong bilateral relations with local governments and their militaries as well as strengthened ties to NATO through the PfP are essential in this 

domain of their and our activity. 

Sixth, as stated above, our economic activity here must go beyond ensuring equal 

energy access to helping these states move forward on their overall independence, 

economic, and political development by supporting diversification of energy connections; helping them build pipelines to the seas and oceans; and allowing them to 

bring all their products more easily to Asian and European markets. But that policy 

must also include trade, investment, and financial instruments as well and not be 

restricted to energy. This also includes supporting projects that would upgrade and 

integrate Central Asia’s infrastructure so that economic ties among states and peoples can flourish more rapidly than would otherwise be the case. We are uniquely 

56

situated to do this given our strong economic position and ties to international economic institutions, a trump card in our hand relative to both Moscow and Beijing, 

let alone Iran. Consequently such efforts must be intensified. 

Seventh, while doing all this we must also be upgrading our government’s capability to act promptly in case of unforeseen contingencies. The State Department’s 

office of Reconstruction and Stabilization, under Ambassador Herbst, must be directed, if it not already doing so, to begin planning for contingencies having to do 

with the real possibility of state failure in Central Asia, particularly Uzbekistan and 

Turkmenistan. If and when that occurs it will usher in violent responses to that 

condition of state failure. And we cannot allow this chaos to go on in uncontrolled 

fashion or to abdicate our real interests in the region. Adequate forecasting, and 

rapid response policies, not only military ones either, must be thought through and 

implemented so that we are ready to move here on a moment’s notice if necessary. 

For example, some Russian analysts are publicly forecasting that if Kyrgyzstan, 

a very fragile and crime-ridden oligarchy, undergoies political collapse, Russia and 

Kazakstan could impose some kind of protectorate until new elections and stability 

take hold. In this scenario Washington would welcome such an action because our 

resoutces are so overstretched that we could not act and we would prefer thatr Russia intervene rather than China. This is because China might use the threat of 

Uyghur separatism of its Muslim minorities as a pretext for sending troops into 

Kyrgyzstan andtaking it over. Such scenarios underscore the growing importance of 

this region and the urgency of paying more attention to and being preapred to mvoe 

rapidly into Central Asia if a major crisis ensues there. 

With regard to Afghanistan we should undertake the following actions in order 

to maximize its chances for both victory and reconstruction under an enduring and 

legitimate government that is moving towards democratization. First, more pressure 

on Pakistan is needed to reduce if not terminate its support for the Taliban and 

other terrorists. If our good offices are requested and acceptable to both sides we 

should also use them with regard to the glacial but ongoing negotiations on Kashmir 

between India and Pakistan. Second, we should promote India’s overall ability to 

interact economically with Central Asia and Afghanistan, seek pipelines and electricity outlets, as we are doing now in order to strengthen the individual economies 

and polities of the region, but also to build a foundation for greater and more enduring regional economic integration through infrastructural links that open up these 

areas to greater development. And, we should also encourage Indian support for the 

Karzai regime in Afghanistan. 

Fourth, we need to keep pushing NATO members to maintain, and if necessary 

expand their commitment to Afghanistan and to provide their forces with sufficiently robust rules of engagement to get the job done on the ground. Fifth, while 

doing so we must also pressure the international community to fulfill their pledges 

to the revival of Afghanistan and to join us in doing so in a way that strengthens 

the Afghan population’s own capability to rule itself without external interference 

or tutelage. This also means a substantial offensive against the drug lords and the 

drug problem which is now the main financial pillar for the Taliban if not other terrorist groups. Success in this particular campaign requires a comprehensive approach to the problem and can only be undertaken if there is sufficiently strong political will among all the players in and out of Afghanistan. And throughout this 

process pressure msut be kept on Pakistan to encourage it to terminate its policies 

of sheltering and supporting the Taliban and the terrorists who seek to operte in 

South Asia. As long as they have a safe haven they will continue to destabilize both 

South and Central Asia, thereby negating our best efforts in both regions. 

While none of these recommendations for Central Asia and Afghanistan represents a panacea, especially if undertaken in individual, or uncoordinated, or incomplete fashion; taken together they can provide a foundation from which we can 

move to repair our policy shortcomings and retrieve at least some, if not all of our 

past position here. If Central Asia is as important as Under-Secretary Armitage said 

it was, we must be prepared to demonstrate that importance in both word and deed 

and do so through a coordinated multidimensional strategy. This kind of strategy 

brings to bear all the instruments of policy, not just the military instrument, and 

does so in ways that leverages the superior ability of the United States and its allies 

to work for peace, security, liberty, and prosperity. Although this is going to be the 

work of years, if not decades and generations, it is incumbent upon us to begin 

doing so now because if we don’t seize this day and those that follows, the crises 

that could engulf this region will more likely than not do so soon. Thus they will 

come more quickly and more violently than would otherwise have been the case. 

And then even all of our best efforts may not prove to be enough to avert those crises.

57

Ms. ROS-LEHTINEN. Thank you, Dr. Blank. 

Dr. Cohen. 

STATEMENT OF ARIEL COHEN, PH.D., SENIOR RESEARCH 

FELLOW, HERITAGE FOUNDATION 

Mr. COHEN. Madam Chairman, distinguished Member, thank you 

very much for conducting these important hearings. I want also to 

thank the staff for doing a great job organizing, and I also want 

to thank Madam Chairman’s great leadership on Middle Eastern 

issues, especially today when Israel is under attack from 

Hezbollah. 

In the last 5 years real and present danger to U.S. national security, especially Islamist terrorism and threats to energy supply, 

have affected United States policy in Central Asia. U.S. interests 

there can be summarized in three simple words: Security, energy 

and democracy. 

In the enduring struggle to safeguard the West in general, America in particular, not only from terrorist threats emanating from 

Afghanistan but also from imports of illegal narcotics or reliance on 

unstable sources of hydrocarbons, it is essential that U.S. policymakers do not inflate the importance of one interest to the detriment of others. 

What is needed in Central Asia is a policy that allows the United 

States to continue to diversify its energy supplies, station its military forces in close proximity to most immediate threats, Afghanistan, and create a lasting and deep impression as a successful, 

democratic free market and power in an area still undergoing development. 

The aim of this testimony is to outline Central Asia’s strategic 

importance, particularly in terms of energy security, and to assess 

how our energy issues fit into wider United States strategic interests in the region. 

The hydrocarbon reserves are concentrated in the Caspian region. As such, a discussion of Central Asian hydrocarbon resources 

would be incomplete without including Azerbaijan, which has considerable oil and gas resources in its own right and is central to 

non-Russian energy transit from Central Asia to points west. 

The bulk of Central Asian Caspian hydrocarbons are located in 

Kazakhstan, Azerbaijan, and to a lesser degree Uzbekistan with a 

lot of gas in Turkmenistan. Both Tajikistan and the Kyrgyz Republic have limited reserves of oil and gas, but in amounts that thus 

far have not warranted much attention from foreign investors. 

Possible future oil pipeline projects include Central Asian Oil 

Pipeline, CAOP; Kazakhstan-China Pipeline that is underway, and 

the Governments of Turkmenistan, Afghanistan and Pakistan 

signed a memorandum of understanding to construct the Central 

Asia Oil Pipeline, which would bring Uzbek-Turkmen oil to 

Gwadar, Pakistan. However, this project has been delayed due to 

the continued instability in Afghanistan. The first stage of the 

Kazakhstan-China pipeline that connects the Kazakh oil fields of 

Aktobe to the Kazakh oil hub of Atyrau is already complete. 

I go in greater detail in all these pipelines and fields in the bulk 

of my testimony which will be entered into the protocol. 

58

The outlook for Western investment in Central Asia is mixed. Especially the gas sector, investment was low. The leaders of the biggest gas producing countries are not friendly to the United States 

and their investment climates can be characterized as abysmal. 

The Central Asian national gas sector has seen very little outside 

investments until recently and Russia continues to benefit from the 

bulk of gas exports from Central Asia as it buys Central Asian gas 

at prices as low as one-quarter to one-third of market prices in Europe, then resells at market rates. 

To put things in perspective, it must be noted that Caspian Sea 

production levels even in their peak will be much smaller than the 

OPEC, Organization of Petroleum Exporting Countries, combined 

output. Production levels are expected to reach 4 million barrels a 

day in 2015 compared to 45 million barrel a day for OPEC countries in that year. Clearly Central Asia is not the largest source of 

oil and gas nor its most successful. 

Political conditions hinder market access. Russia dominates the 

natural gas sector, and with the exception of Azerbaijan and 

Kazakhstan, the countries in the region do not offer a sustainable 

investment climate. 

Despite all these difficulties, investors and governments are 

rushing to lay claim to hydrocarbon reserves of Central Asia. One 

of the most attractive features of Central Asian oil and gas must 

be these are deposits yet to be developed. National Governments 

are reliant on foreign investors to provide capital to do so. 

Geopolitical location is a keen concern as Central Asia continues 

to evolve as a highly important strategic area, especially for Russia, United States, China, Iran and India. Political instability in 

other major oil and gas production locations is very much in the 

news, the Middle East, Venezuela, where President Hugo Chavez 

just visited Belarus and is signing a $1 billion arms agreement 

with Russia, including the sale of sophisticated Soho 30 fighter 

bombers and building of a Kalashnikov machine gun factory in 

Venezuela. 

All these factors of instability are fueling the drive to claim a 

share of Central Asian resources. Last but not least, all these individuals’ concerns are infused with a spirited balance of power and 

sphere of influence politics. 

The role of the United States focusing on numerous factors that 

I mentioned before is also preventing the United States from being 

a hegemonistic power in the region. The more we are involved, the 

more Russia and China and Iran are resisting our presence there. 

Our presence is constricted by the unease with which the authoritarian governments of most Central Asian regimes are fighting us, 

but their undemocratic nature is of no consequence to Russia, 

China, Iran or even India. 

Even if the U.S. has the capacity to limit the presence of other 

large powers in the region, to do so would be an error, just as it 

was a mistake for the United States to support an oil and steel embargo on Japan in the 1930s, triggering its southern expansion of 

the Pacific. The U.S. and other great powers share the goals of stability, economic development and preventive religious radicalization 

of terrorism. 

59

The United States does not want to openly antagonize China, 

Russia or India over their involvement in Central Asia but is likely 

to derive benefits from regional cooperation with them in the region. Despite the unappealing nature of authoritarian regimes in 

the region, Chinese and Russian backing of this government for 

long term may allow a transition to less authoritarian regimes. 

The political disintegration today of any of these countries would 

have serious consequences for the global community. 

Furthermore, radicalism, heroin trafficking, organized crime are 

all serious problems in all Central Asia and the extent to which we 

can help fighting those will be our contribution to Central Asian 

stability. 

Ms. ROS-LEHTINEN. Thank you, Dr. Cohen. If you could wrap it 

up. 

Mr. EBEL. Thank you, Madam Chairman. 

Ms. ROS-LEHTINEN. I didn’t mean for you to end right there. 

Sorry. I just meant wrap it up. I was not pulling the plug. Sorry, 

Mr. Ebel. 

Mr. COHEN. There is no question that the United States should 

stay engaged and persistent in Central Asia. We need to help in 

the resolution of interregional conflicts, support political and economic security and cooperation. To foster regional stability and economic interdependence we need to promote financial and economic 

development based on market principles, aid in development of 

communications, transportation, health and human services infrastructure. Whatever we can contribute to market-based development, to the rule of law, to transparency is going to be in our interests and the interests of international business and in the interests 

of the nations and peoples of Central Asia itself. 

We need to encourage Central Asian Governments to work with 

us as well as with the EU and the Government of India to diversify 

away from current fossil fuel resources in the Middle East as well 

as away from Russian monopoly, especially in the gas area. 

The diversification to China of the pipelines is not sufficient. We 

need to help the region to develop the third direction of transit and 

that is to the south, to involve Pakistan and India down the road. 

We need to continue developing good relations with Azerbaijan 

and Kazakhstan and have to draw lessons from the failure of our 

policy to maintain military presence in Uzbekistan. We need to in 

case of——

Ms. ROS-LEHTINEN. Now we need to really wrap it up. 

Mr. COHEN. In case of Turkmenistan we need to identify and 

support secular, moderate Islamic and democratic opposition parties, but must be opposed to any jihad extremism and committed 

to principles of democracy. 

Thank you, Madam Chairman. And the rest of my testimony will 

be——

[The prepared statement of Mr. Cohen follows:]

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Ms. ROS-LEHTINEN. It sure will. Thank you. 

Mr. Ebel. 

STATEMENT OF MR. ROBERT EBEL, CHAIRMAN, ENERGY PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL 

STUDIES 

Mr. EBEL. Thank you, Madam Chairman. I first traveled to Central Asia in 1969 as a member of a delegation whose charge it was 

to develop an assessment of the natural gas industry in that part 

of the world. The republics of Central Asia were then defined by 

yurts and camels and moved all their gas to Moscow. My visits 

since then have allowed me to keep up with the social, economic 

and political changes. 

I would venture that when the Soviet Union broke up in December 1991 rare was the individual in Washington who could name 

the five now independent republics that make up Central Asia. In 

the intervening years international media changed all that because 

several of the countries possessed oil and natural gas in volumes 

that, initially at least, were presumed to offer a viable alternative 

to Middle East oil. 

Kazakhstan and Turkmenistan are two of the five states bordering on the Caspian Sea, an inland body of water that caught the 

eye of the major international oil companies for several reasons. 

First, nothing is quite attractive as something which in the past 

has been denied or which is now available. Second, the Caspian 

producing potential is world class. Third, this potential could not 

be realized within an acceptable time frame without outside participation. Fourth, and perhaps most important for the foreign investor, the oil will not be developed to meet domestic requirements. 

Domestic requirements are comparatively small and are expected 

to remain that way. Most of the oil to be produced will be for the 

export market. 

Over time more realistic assessments have set aside the assumption that Central Asian could substitute for Middle East oil. However, interest in Kazakhstan and Turkmenistan did not diminish 

but focused on the contribution that we might expect from these 

two countries to make the world supplies. The timing and scale of 

that anticipated contribution, particularly of oil, unfortunately, 

faced the unavoidable fact that Central Asia is landlocked. Indeed, 

doubly so, for the Caspian Sea must first be circumvented if access 

to ports of export are ultimately to be reached. 

When these states looked north they saw Russia and Russian export pipelines were and still are unavailable to third parties. China 

stood to the east but at that time was a net exporter of oil. Iran 

lay to the south but was unavailable to American companies. Exports to the west remained the only viable option. 

We the speakers have discussed the policy of the United States, 

and I won’t repeat that, but why did we make this considerable effort enduring and successful? It all has to do with the power of oil. 

Just what is that power? I would describe it this way. Oil is high 

profile stuff, where fuel is much more than automobiles and airplanes. Oil fuels military power, national treasuries and international politics. Because of this it is no longer a commodity to be 

bought and sold within the confines of a traditional energy supply 

76

and demand balance. Rather, it has become a determinant of wellbeing, of national security and international power for those who 

possess this vital resource, and the converse for those who do not. 

These sentences describe the past, the current world oil situation, and the future. 

We have noted Central Asia’s past, but what about the future? 

Tengiz has been discussed, a pipeline from Tengiz has been mentioned, an export pipeline from western Kazakhstan to the Chinese 

border, the discovery of Kashagan, probably the largest oil discovery worldwide in the past quarter century. And on the basis of 

these two fields Kazakhstan might be exporting as much as 3 million barrels a day by 2015. 

Do Turkmenistan and Uzbekistan matter? They do, but for differing reasons. Turkmenistan is profoundly isolated from the outside world as a rich natural gas resource base, or so it claims. It 

is selling gas to Russia and Ukraine and entertaining plans to sell 

to China, to Pakistan and to India. But could it meet all these commitments? Doubts have been raised. Potential buyers must be assured of reserves confirmation. Pipelines are not built unless and 

until an adequate reserve base has been independently confirmed 

and long-term sales contracts have been signed, assuring at least 

those banks having loaned construction funds will be repaid. 

Uzbekistan is increasingly unstable and has turned away from 

the West and toward China and Russia. It is independent in terms 

of oil supply and exports large volumes of gas to Russia. 

I would note that those volumes plus those imported from 

Turkmenistan allow Russia in the face of relatively stagnant domestic gas production to meet growing demand at home and in the 

West. 

In conclusion, I would note that I tried to catch up on my reading 

in the summer, although energy security issues seem to have gotten in the way. But I would like to quote from one book I did find 

time to read:

‘‘It would be sad to see how the magnet of oil draws great armies to the Caucasus; it will be fascinating to examine how oil 

companies mobilize their forces of diplomacy to fight their battles across green tables and behind the scenes. It should be enlightening to study how far the foreign policies of nations, in 

the matter of recognition, credits and so forth, are influenced 

by that universal lubricant and irritant, oil.’’

The author of the book is Louis Fischer, the title of the book is 

Oil Imperialism, the date of publication, 1926. These words come 

close to capturing the sense of what is taking place today in that 

remote part of the world. We only need to have substitute Central 

Asia with the Caucasus. I thank you for your attention. 

[The prepared statement of Mr. Ebel follows:]

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Ms. ROS-LEHTINEN. That is great. Thank you. 

I just have two related questions for any who would like to comment, or all, and if you could comment on the Russian President’s 

statement or suggestion regarding the launching of the SCO energy 

club. 

Do you think that such an arrangement would likely do for natural gas what OPEC has done for oil; that is, control production 

and drive up prices. And related to developments at the SCO, 

please comment on the recent anti-American developments at the 

SCO and what should U.S. strategy be in countering these developments? 

Dr. Cohen. 

Mr. COHEN. Madam Chairman, these are two excellent questions. 

I am very glad you asked them. Because if Iran joins SCO or, even 

without that, if Iran and Russia get together to create what they 

call a gas OPEC, that will be a step in the wrong direction because 

they will be controlling together massive production capacity. 

I do not remember off the top the top of my head after Russia, 

which is number one, which one is number two in terms of reserves. Either Qatar or Iran. It is Iran. 

So if you think about a number one and number two producers 

of gas getting together, it is like Russia and Saudi Arabia getting 

together. That says it all. 

In terms of Iran being part of SCO, I think also it is going to 

be geopolitically a step in a wrong direction, directly affecting 

American interests if you take Russia and China and Iran to the 

west, to the east, and to the south because it will be a step to creating a geopolitical bloc essentially aimed at the United States. 

So we need to fight that. I floated an idea of United States exploring joining the SCO as an observer. So far there was Chinese 

resistance. There probably would be a Russian resistance. But we 

need to maintain a dialogue, we need to sort of signal to them that 

we are not there to affect their vital interests but we need to engage in dialogue, in collection of information. 

Ms. ROS-LEHTINEN. Thank you. Dr. Blank. 

Mr. BLANK. Let me try to broaden the frame on those very good 

questions. First of all, Mr. Putin has been calling for a gas cartel 

since 2002. This is just the latest iteration of that call, and as Dr. 

Cohen said, if he is able to bring Iran into this, it would create the 

kind of OPEC for gas. 

But the immediate interest is also to dominate Central Asian gas 

and prevent Central Asian countries from exporting gas to other 

countries except on Russian terms. For example, there are now 

talks about pipelines from Uzbekistan and Kazakhstan to China 

with a branch from Turkmenistan, which would give those countries more independence in gas because they would have another 

customer other than Russia. 

There are also talks about a pipeline through Iran to Afghanistan, Pakistan and India or, now with major gas discoveries in Afghanistan, Afghanistan, Pakistan, India pipelines, which would 

keep Iran out of the equation but might also injure Turkmenistan 

if they are not able to participate. 

If the United States wants to prevent the formation of this closed 

bloc which would not only be Iran and Russia under optimum conVerDate Mar 21 2002 15:55 Nov 01, 2006 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6601 F:\WORK\MECA\072506\28967.000 HINTREL1 PsN: SHIRL
82

ditions, from Moscow’s point of view, but it would also be all of 

Central Asia, it needs to invigorate its policies in Central Asia to 

open up dialogue with all five, and I emphasize all five, of the Central Asian Governments on alternative pipelines and energy opportunities for them so that they are able to join with the United 

States, with other consumers like India and for that matter China, 

which certainly needs the energy, in a counter cartel, if you like, 

a counter association of consumers and producers if possible so that 

they would have more freedom of choice and the Russians would 

not be able to dominate the market and set the world price for natural gas. 

Ms. ROS-LEHTINEN. Thank you. Mr. Ebel. 

Mr. EBEL. I am not sure, I am not convinced that joining a gas 

cartel would be in the ultimate national interest of Russia. Several 

years ago when I was visiting in Moscow I was asked by a Russian 

official, he said we are considering joining OPEC, what would you 

recommend? I said why do you want to join an operation that tells 

you how much you can produce and how much you can export? 

Aren’t you much better off where you are? Of course they never did 

join. So I have to wonder what the Russians would say to joining 

a cartel. 

Ms. BARAN. I would like to build on what Dr. Blank and Eric 

Cohen said and bring in Turkey to the dynamics because Turkey 

is the key transit country for Central Asian gas going to Europe 

and it has been the source of the main sort of competition between 

the United States and Russia. What we do see actually is a de facto 

gas cartel already taking place with Russia working with Turkey 

and Iran to bring Iranian gas to Turkish markets and then together with Iranian and Russian gas sending it onwards to Europe, 

and it is basically to make sure that the United States will not 

have any chance to succeed in getting Central Asian gas directly 

and independently to European markets. 

And here it is very important to see sort of where Turkey stands 

because while the SCO members, especially the ones that Ariel 

mentioned, have not been interested in having the United States 

as an observer, especially the Russian President has been eager to 

have Turkey join as an observer. And of course as we talk about 

SCO building as potentially an anti-NATO alliance, this can be 

very, very significant. So far the Turkish position is to stay away, 

but given the increased gas ties and energy ties with Russia and 

Iran, I will say this is something we need to watch. 

Ms. ROS-LEHTINEN. Thank you so much. I want to thank all the 

panelists for joining us today and thank the audience as well, and 

as you had pointed out, the excellent staffers who put this together. 

Great testimony. Thank you very much. The Subcommittee is now 

adjourned. 

[Whereupon, at 3:45 p.m., the Subcommittee was adjourned.]

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