Engaging the Caspian: Clinton Administration strategic thinking and policies

Assuming office one year after the dissolution of the Soviet Union and the emergence, along with Iran, of four newly independent riparian states, it was chiefly the Clinton Administration which took responsibility for laying the foundations of the US Caspian policy.

Despite the fact that the Administration’s choices marked the course of the White House regional policy from then on, the latter was rather slow in identifying US interests in the basin and, broadly speaking, in the area. This attitude apparently contrasted with the greater activism of US private interests, which reached the Caspian Sea long before the policy makers turned their attention to the area. Indeed, although US energy companies were already engaged in the attempt to develop Caspian offshore resources on the eve of the

Soviet collapse,[1] the US Administration was not quick to follow and support private initiative.

Various were the motivations behind this initial reluctance to be actively involved in the area, the most relevant being the will not to jeopardize the unprecedented entente with the Kremlin which, moreover, came to be regarded as a stabilizing force in the volatile post-Soviet environment, whose ‘wrenching’ economic and political transitions posed “troubling uncertainties” to US strategic planning.[2] Such an attitude resulted, on the one hand, in a lais- sez faire policy toward Russia - which de facto gained an indirect form of recognition of a privileged set of interests in what came to be regarded as the Russian ‘near abroad’ - and on the other hand, in an indirect ‘proxy’ engagement pursued mainly through Turkey, whose liberal-democratic and secular model appeared to be a natural reference and inspirational point to be provided to the former Soviet republics, and especially to those linked to Turkey through ethno-linguistic affinity. Therefore, the very first phase of US policy toward the former Soviet Union was marked by a lack of regional or subregional focus, with the sole but relevant exception of disarmament policies, which brought specific regional actors - namely Belarus, Ukraine and Kazakhstan - onto the White House foreign policy radar.

It was only with the gradual decline of the so-called Russia First policy that, from late 1994, the White House set up a consistent regional policy toward the former Soviet south. In this scheme, Caspian Sea policy became a key vector for advancing US regional and sub-regional interests and goals, mainly due to the basin’s resource extraction potential.

The development of the Caspian Sea energy potential was functional to the achievement of three core objectives of Washington’s foreign and energy policy. Above all, it represented a key tool with which to support and foster the newly independent states’ recently-achieved independence and sovereignty, as well as help them overcome the tough economic crisis inherited at the end of the Soviet system.[3] Indeed, concerns connected to state failure were paramount for the US view of the region and, therefore, while the successful transition of the newly-emerged and emerging democracies in Europe and the former Soviet Union was considered to be “vital to world stability”, more specifically the Clinton Administration acted from the assumption that “a stable and prosperous Caucasus and Central Asia will help promote stability and security from the Mediterranean to China”.[4]

Secondly, and consistently with the approach institutionalized by the 1998 Comprehensive National Energy Strategy,[5] the development of Caspian energy potential responded to the need to diversify hydrocarbon producing areas. Under this perspective Caspian resources would have allowed a reduction in over-dependence on Middle-Eastern suppliers and, at the same time, to limit OPEC’s grip on the oil market.[6]

The third and central tenet of the Clinton Administration’s Caspian policy was “vigorous promotion of US business interests”.[7] [8] Indeed, in the Administration’s view the engagement of national firms in projects aimed at the development and export of the basin’s hydrocarbons provided the ‘single best avenue’ for enhancing cooperation, as well as a favored tool for fostering regional cooperation among the newly-independent states.11 Moreover, besides being functional to the enhancement of bilateral relations, US - and, broadly speaking, Western - private initiatives were seen as a way to promote the reform of the national energy sectors as well as an incentive for producer states to improve business practices and the investment climate, thereby fostering the path toward the free market and, hence, toward regional prosperity and stability.[9] Thus, supporting national companies meant advancing a logic of mutual convenience, allowing US companies to circumvent key constraints to activities in the area, and producer countries to attract FDI.

Against this backdrop, between 1993 and 1997, US firms supported by the White House took the lead in the development of the most promising Caspian oil and gas fields, especially in the Kazakh and Azerbaijani offshore sectors of the basin (see Table 1).

Table 10.1 - US firms stakes in major Caspian area oil and gas fields (at December 1998)








Chevron (Texaco) ExxonMobil (Mobil)

  • 50%
  • 25%














  • 17.01%
  • 9.82%
  • 9.52%
  • 2.45%


Nord Caspian Sea (incl. Kashagan)




  • 18.52%
  • 9.26%







* year refers to the signing of the PSA and Joint venture establishment for Tengiz Sources: Compiled by the author from various sources.

Closely related to the aforementioned goals, US Caspian policy pursued other equally important strategic aims, the relevance of which went beyond the boundaries of the Caspian area, gaining relevance in a broader regional perspective. The White House energy policy in fact represented a key tool for keeping “Turkey in, Iran outside and Russia tied down” in the wider Caspian area, to paraphrase Lord Ismay’s famous slogan.

Starting from the assumption that Ankara's and Washington's interests in the region complemented each other and from the need to work together to achieve common goals,[10] keeping “Turkey in” basically meant actively supporting Ankara’s regional projection and, in particular, its Caspian energy strategy - both in terms of Turkish firms’ participation in upstream projects and of support for Turkocentric infrastructural projects. This goal had both an economic and a strategic rationale. Indeed, while it was functional to the enhancement of relations between Ankara and the Turkic states of the wider Caspian area, at the same time it aimed to ensure that the growing Turkish demand for energy would not result in an increase in dependence - and hence vulnerability - on energy imports from Russia and Iran.

Against this backdrop, diversification of Turkish energy supply channels was in itself both an aim and a tool for achieving wider regional goals. In White House strategic thinking, Turkey had a greater role to play in US regional policy than merely offering an outlet for Caspian hydrocarbons. Turkey’s strategic location between the Caspian basin and the European market provided a natural bridgehead for infrastructure projects, allowing the basin’s newly-independent producers to benefit from an export network able to reach Western consumers by simultaneously bypassing existing Russian infrastructures to the North and potential Iranian routes to the South. Put forward in the second half of the 1990s,[11] the concept of an East-West energy corridor between Central Asia and Europe became the centerpiece of US Caspian policy and was one of the main reasons behind the support provided, since early 1995, to the Azerbaijani-Georgian-Turkish route for the export of oil and gas extracted in Azerbaijan - seen as the Western leg of the corridor project. In this context, the Caspian basin gained “double value” for the US regional energy policy - not only as a producing area for relevant and largely unexplored energy resources but also, potentially, as a key transit channel for Central Asian hydrocarbons going westward.

In the Clinton Administration’s view, the primary justification of the East-West Corridor was the need to prevent Caspian exports from being dependent on transit through the territory of existing producer states - which could prioritize their own exports rather than those of Caspian producers - as well as from being dependent on an already-congested regional choke point such as the Strait of Hormuz or the Bosphorus.[12]

Besides addressing commercial logic, such a stance was consistent with the US broader strategic approach to the former Soviet southern tier. Indeed, while circumvention of the Russian network was a way to avoid perpetuating forms of economic - and therefore political - dependence on Moscow, the firm exclusion of Iran from the Caspian was the result of the long-standing crisis in bilateral relations and, simultaneously, the will to avert the expansion of Teheran’s influence in the post-Soviet space. To simplify this, it may be argued that US Caspian policy was pursuant to a ‘double containment’ strategy which, however, worked at different degrees of intensity vis-a-vis Iran and Russia.

Keeping ‘Iran outside’ Caspian development represented an absolute imperative for US policy, an isolation strategy which went as far as vetoing any participation of Iranian companies in Caspian oil development projects.[13] On the contrary, the Administration’s policy toward Russia was more nuanced. With the ultimate goal of balancing, and not eradicating, Moscow’s influence in its neighborhood, and consistent with the desire to keep dialogue and cooperation channels open, US policy toward Russia was a delicate balance of containment and engagement strategies - a “carrot and stick” approach in which Caspian energy development was one the most visible examples. Therefore, although on the one hand US Caspian policy was basically aimed at breaking the Russian monopsony on the purchase of regional hydrocarbons - as well as limiting its dominant position on the Turkish market - on the other hand the White House constantly sought to avoid giving energy competition the connotation of a “zero sum game” between Russian and US interests. On the contrary, with the ultimate goal of keeping Moscow “tied down” in energy cooperation, it always stressed the win-win nature of Caspian development,[14] welcoming joint ventures involving respective NOCs and advocating a ‘multiple pipeline’ scheme for the export of Caspian resources, fully compliant with the East-West Corridor concept.

The multiple pipeline logic was adopted on both shores of the Caspian. In Azerbaijan, it materialized in the support simultaneously provided for the Northern and Western routes - toward the Russian and Georgian Black Sea shores respectively - for the export of Early Oil extracted in the Azeri-Chirag- Guneshli (ACG) offshore field. In Kazakhstan, the US supported the Caspian Pipeline Consortium pipeline instead, designed to carry oil from the Tengiz field to the Russian Black Sea port of Novorossiysk, running along the northern Caspian shores (see Table 10.2).

Table 10.2 - US multiple pipeline scheme for the Caspian oil and gas export


Main source

US Companies



Azeri-Chirag- Guneshli (ACG) Early oil

Chevron ExxonMobil Devon Energy Hess Corporation



ACG Early oil

Chevron ExxonMobil Devon Energy Hess Corporation


Baku-Tbilisi-Ceyhan (BTC)


Chevron, ConocoPhillips Hess Corporation


Caspian Pipeline Consortium









South Caucasus Pipeline

Shah Deniz

No US company


Trans-Caspian Gas Pipeline




Besides helping overcome the technical and financial issues that hampered the realization of pipeline projects,[15] US involvement in the Caspian energy competition proved to be essential in coordinating governmental and private activities, and building a wider consensus and solidarity of intent among stakeholders which allowed for the laying of Caspian pipelines. Such consensus was all the more relevant for the realization of the Baku-Tbilisi-Ceyhan (BTC) pipeline which, though representing the fulfillment of US regional vision and primary goals, had a weak economic rationale compared to alternative export routes due to the high costs of the project and the low energy prices in the world market throughout 1990s.[16] Indeed it is difficult to overestimate the relevance of the BTC, which realized the US Administration’s vision and goals in terms of development of the basin’s resources, enhancement of cooperation among regional actors and containment of both Russian and Iranian regional influence. In such a context, the October 1998 Ankara Declaration of support for the BTC as the main export pipeline project from Azerbaijan - subscribed to by the Turkish, Azerbaijani, Georgian, Kazakh and Uzbek presidents - and the November 1999 signing of the intergovernmental agreements for the pipeline construction were the main diplomatic achievements of Clinton’s Caspian energy policy.

Although economic and commercial considerations were paramount for US regional projection - at least at first sight - security cooperation was a relevant and ineluctable component of US policy toward the Caspian Sea. Moreover, investing in security cooperation with Caspian partners - simultaneously a key aim and a precious tool in view of regional development and stabilization - represented a basic tool for reducing the ‘above ground’ risks faced by US and Western investors in the energy sector.[17]

However, against the backdrop of the tensions generated by the NATO eastward enlargement, the will not to antagonize Russia as well as the difficult situation of the Caspian littoral states[18] prevented the US from directly engaging in the area - with the partial exception of the Congress-approved foreign military education and training programs and activities.[19] Therefore, security cooperation was mainly pursued through multilateral means, both directly and indirectly.

From the former point of view, although maritime cooperation never came to the fore, Caspian states were engaged in the process of transformation of the NATO from a defense alliance to a wider security cooperation mechanism projected over the wider Eurasian space. The main tools for engaging Caspian littoral states were the Partnership for Peace and the Euro-Atlantic Partnership Council (EAPC), launched in 1994 and 1997 respectively. While the EAPC involved partners in political dialogue, providing them with a significant yet indirect form of territorial integrity guarantee, under the PfP scheme bilateral programs were initiated in order to reform the military apparatus, improve defensive capabilities, foster regional cooperation, build mutual understanding and promote interoperability of forces.

Besides developing under the NATO umbrella, security cooperation was simultaneously pursued through the promotion of multilateral mechanisms for regional cooperation. The foundation of the GUAM (Organization for Democracy and Economic Development) organization was a key initiative to support and foster regional cooperation outside Russian-promoted and hegemonized frameworks. Established in 1997 by Georgia, Ukraine, Azerbaijan and Moldova, the grouping had tight relations with the Clinton Admin- istration.[20] Moreover, though GUAM included only a single littoral state, the emphasis placed by the group on the coherent and effective development of the Caspian extraction and export potential, as well as the need to protect regional infrastructures[21], nevertheless provided the forum with a special role in US policy toward the basin. Against this backdrop, although systemic and regional conditions prevented security cooperation proposals and objectives from actually being achieved, nonetheless such a vector of GUAM cooperation signaled the priority given to security both in relations among its members and between them and Euro-Atlantic partners, as well as in the White House's conception of regional policy.

  • [1] The reference goes primarily to the contacts established by the Kremlin, since 1987, with Chevron and BP forthe development of Kazakh Tengiz field and Azerbaijani Azeri filed. S. LeVine, II petrolio e la gloria. La corsa aldominio e alle ricchezze della regione del Mar Caspio, Fagnano Alto, Il Sirente, 2009, pp. 97ss.
  • [2] The White House, National Security Strategy, US Government Printing Office, Washington, 1994, p. 1. With specific reference to the Caspian littoral states, US-Russian cooperation was essential in order to engageKazakhstan, which inherited significant part of Soviet weaponry, in negotiations concerning nuclear disarmament and destruction of weapons of mass.
  • [3] S. Talbot, A Farewell to Flashman: American Policy in the Caucasus and Central Asia, Address at JohnsHopkins School of Advanced International Studies, 21 July 1997.
  • [4] See The White House, National Security Strategy of the United States, Washington, US Government PrintingOffice, 1993, p. 1; Idem, A National Security Strategy for A New Century, Washington, US Government Printing Office, 1997, p. 72.
  • [5] Department of Energy, Comprehensive National Energy Strategy, Washington, April 1998.
  • [6] See remarks by D.L. Goldwyn, Assistant Secretary of Energy for International Affairs at the Department ofEnergy, in: “The Status of Infrastructure Projects for Caspian Sea Energy Resources”, Hearing Before theSubcommittee on International Economic Policy, Export and Trade Promotion of the Committee on ForeignRelations, US Senate, US Government Printing Office, 2000, p. 7.
  • [7] J. Herbst, (1996), p. 4.
  • [8] Ibid.
  • [9] D. Goldwyn, (2000), p. 6.
  • [10] M. Adair, Deputy Assistant Secretary of State for European and Canadian Affairs, in: “US Interests in theCaucasus Region”, Hearing before the Committee on International Relations, House of Representative, 30 July1996, Washington, US Government Printing Office, 1996, p. 47.
  • [11] The corridor concept was formalized and became the cornerstone for the 1997 Silk Road Strategy Act,whose main aim was “to target assistance to support the economic and political independence of the countriesof the South Caucasus and Central Asia”. Hon. B. Gilman, The Silk Road Strategy Act of 1997, H.R. 2867,Congressional Record, vol. 143, Issue 156, US Government Printing Office, Washington, November 1997, pp.E2240-2.
  • [12] F. Pena, US Secretary of Energy, in: “The Us Role in the Caucasus and Central Asia”, Hearing Before theCommittee on International Relations, House of Representatives, 30 April 1998, US GPO, Washington, p. 12.
  • [13] Besides influencing the decision of the Azerbaijan International Operating Company not to involve Iraniancompanies in the 1994 “Contract of the Century”, US Administration pursued the Teheran isolation policy mainly through the 1996 Iran and Libya Sanctions Act. The Act imposed sanctions on companies investing over $20million per year in Iran. As per the evolution of US normative action aimed at Iran isolation, K. Katzman, IranSanctions, Congressional Research Service Report, 11 October 2013.
  • [14] Besides being consistent with the aforementioned logic, the prudent mix of containment and engagementpolicies was the result of the awareness that Moscow lacked a single and coherent vision of the relations withthe neighbors, torn between neo-imperial tendencies and liberal views. Under this perspective, the engagement strategies were functional in supporting the “dovish” positions within the establishment, favoring a transition suited to US interests and policies.
  • [15] US support for pipeline projects proved to be decisive in involving international and national financial institution as well as in helping coordinate stakeholders activities. Under the latter perspective, particularly significantwas the 1998 opening, in Ankara, of the Caspian Finance Center, aimed at coordinating regional activities ofUS export finance agencies. Moreover, a key provision for the realization of the regional goals was the creationof the post of Special Advisor to the President and the Secretary of State for Caspian Basin Energy Diplomacy,entrusted sine July 1998 with the task of “assuring maximum coordination within the Executive Branch of USpolicy and programs relating to the development of oil and gas resources in the Caspian Basin”. The WhiteHouse Office of the Press Secretary, Morningstar Named Secretary of State for Caspian Basin Energy,Statement by the Press Secretary, 24 July 1998.
  • [16] As per coeval critic views on BTC economic rationale, see D. Dettke (ed.), A great game no more: oil, gasand stability in the Caspian Sea region, Friedrich-Ebert-Stiftung, Washington and Berlin, 1999.
  • [17] As per a coeval perspective on the close link between energy or economic issues and security in the region,see S. Blank, Energy and Security in Transcaucasia, Strategic Studies Institute, US Army War College, Carlisle Barracks, 1994.
  • [18] Under this perspective, the 1994 Department of Defense Annual Report highlighted that: “Establishment ofprograms with [...] the Caucasus nations awaits a peaceful settlement to their armed conflicts, and cooperationwith other Central Asian nations has been deferred until they implement political and economic reforms”. USDepartment of Defense, Annual Report to the President and the Congress, Washington: US Government Printing Office, 1994, p. 81.
  • [19] Under the International Military Education and Training Program, 2.821 thousands dollars were allocated toKazakhstan between 1992 and 2000, while 1.553 thousands dollar were allocated to Turkmenistan between1994 and 2000. Moreover, in the same timeframe Kazakhstan and Turkmenistan received 7.050 and 2.150thousands dollars under Foreign Military Financing program. Due to the restrictions on assistance to Azerbaijan established by the Section 907 of the Freedom Support Act, no security cooperation was established between Department of Defense and Baku. Department of Defense Security Cooperation Agency, “Foreign Military Sales, Foreign Military Construction Sales And Other Security Cooperation. Historical Facts”, FinancialPolicy And Analysis Business Operations, DSCA, September 2012, pp. 531-533; 697-699.
  • [20] See T. Japaridze, “The Organization for Democracy and Development-GUAM: A road map to relevance?”,Central Asia and the Caucasus, no.3-4(51-52), 2008, p. 76.
  • [21] For instance in 1998 GUAM members discussed about the possibility of establishing a regional peacekeeping force aimed at the protection of the Caspian pipelines to work, possibly, within the framework of the PfP. A.Burke, A US Regional Strategy for the Caspian Sea Basin, Naval War College, Newport, 2000, p. 16.
< Prev   CONTENTS   Source   Next >