The geopolitics of oil and asia

10/04/2007 11:30:00

Topics for today • New section: current problems of international political and economic importance in Russia and her former states o Oil (today) o Nuclear proliferation o NATO ad the eU o Relations with america • On the subject of oil o To examine the current situtation regarding the movement of oil an gas as they travel from the Caucasus and Central Adia to the west sometimes through Russia, sometimes not o To develiop and understanding of the political and economic conflicts involved in the movement of these valuable resources across borders a new version of the great game Oil is a source of wealth for those who control it 55% of Russian exports is oil based products • Russia is really reliant on the wealth it garnishes from oil • central asian nations are not interested in sharing the wealth of this oik with Russia • “te new great game: • now the great game is being fought over pipelines, not empire building • the players in this great game are far more diversethis game also applies to the middle east Lots of oil Lots of problems in the great game, there are shared problems • each must struggle fr a piece of the profits • each must figure out how to get the oil to the west and increasingly to the east • each must deal with instability in the region • each must deal with the Bosporus and the black sea to the west pipelines must ften go through the world that are politically volatile all of these can potentially lead to the shutting down of pipelines • and all oil must travel through the Bosporus

o massive ecological and congestion roblems in the Caspian ad Bosporus o all of these countries must deal with eachother's governments o Russias relationship with oik • Russian economic growth is dependent upon its export of oil o What does this mean for Russia economy? o Some bad bound up in world politics and the great game o Some good control over large profits a chance to spend money on reforms • What is the long term viability of this situation • Oil is over valued rigt now • ….but if Russia is basing its economy on oil inflation, russia’s economy will collapse this is a clear corrolation of growth and oil prices • Russia has become addicted to price regime • When world oil prices dropped around$10 a barrel it correlated to russias worse economic problems • In march 2004 warned the president that 75% of russia’s gdp growth was due o the high level of oil prices • Russia has no choice but to get involved in other il ountries political ad economic affairs • Creating on and off shore oil pricing • The oil industry also became renationalized • And theoretically it is better than going to the oligarchs • Hasa alleviated the pressure on the Russian governmwnt and hlped it modernize Russia, Oil, and Europe • Europe relies heaily on Russia for oil • Polnd gets about 96% f its oil frm Russia • Twice the pipeline have been shutdown • Ukraine in 2006 o Russia raises prises by 4 times

 Ukraine responds by cutting the pipeline to Europe o Russia decreased the price • Ukraine and a Belarus can now call the shots with regards to European oil • It was initially reported that Belarus had recently cut the Russia pipeline, but people realized later that Russia had actually cut the pipeline Who is right and ho is wrong in these disptes? Oil in te Caucasus and central asia • A lot of powerful eople are vying for their oil • Its not ut about whre te oil comes from it about how its transported • The countries I the region are als playing an integral role in the negotiatian process • New pipelines • The us supports the BTC pipline and azerbaijian because it avoids ussssian control over oil • BP owns BTc pipeline o The countries however are able to gain a lot of revenue from the pipeline The American prospective • America is interested in fostering encironments for investment • America is intereted inddiscouraging monopolies and choke areas that top the flow of oil • America is interested in affordable oil • America does not want Russia to have control over the oil •

10/04/2007 11:30:00

10/04/2007 11:30:00