Sunday, May 06, 2007

Lebanon War and BTC?

[ The introduction part in our MNEs' economic impacts paperwork for module: N1B208 International Firms. By: Mohd Sharazad Saiful Bahri, Kamran Karbassi, Omer Kigili, Izer Yakuppur, Rosdanial Rosti, Chris Masters ]

"The Kremlin has been ‘disturbed’ by the decisions made by Mikhail Saakashvili; the President of Georgia since 2003, about his campaign to join NATO and the European Union (EU). Yet, despite this cold relationship between Georgia and Russia, the centre of attention lies upon Baku, the capital city of Azerbaijan. It is a post-Soviet country with around 8 million people and most of the Shia Muslims, it has the biggest population. Not just that, it also has oil and gas which a consortium led by British Petroleum (BP) is extracting from the Caspian Sea and pumping through new pipelines across Georgia to Turkey and beyond. All the Caucasian economies are now picking up, recovering from the claw of communism and command economy – even corrupt Armenia’s, dependent though it mostly is on remittances. According to the finance minister, the 34.5% growth created by Azerbaijan’s second oil boom (the first was 100 years ago) was the highest in the world last year (The Economist, 2007)"

"The Caspian Sea is completely landlocked by Russia, Kazakhstan, Turkmenistan, Iran, and Azerbaijan. The Baku-Tbilisi-Ceyhan (BTC or “Baku-Ceyhan”) oil pipeline is a proposed pipeline that would span 1,056 miles from the Azerbaijan capital of Baku, through Tbilisi Georgia, ending in the Mediterranean city of Ceyhan, Turkey. British Petroleum (BP) is the lead sponsor; there are seven other participants. Construction is targeted to begin in autumn 2002; project operations are planned to commence by early 2005"

[The conclusion]

"Baku-Tbilisi-Ceyhan pipeline is an example of an operation by MNEs in the less developed countries yet at this point of our writing they are experiencing a developing economy. This project paper explains the economic impacts that BTC brought upon the respective countries. However, on the course of achieving an agreement for the construction of the pipeline, various disputes had to be cleared out by the main MNE which is BP. The disputes and campaigns organised especially by the ‘environmentalists’ served as a fact that ‘positive’ economic impacts from the MNEs’ promises should not be taken at ‘face value’. In reality, there is always the other side of the coin which is always the negative impacts of an operation by MNEs that would not be revealed to the public. It is a fact that every MNE does not want to tarnish its reputation in convincing the public about the impacts that they may bring upon. Nonetheless, in today’s time of conflicting and escalating wars especially in Iraq and the tense attention towards Tehran (both countries are in the rich area of oil), BTC keeps on ensuring that energy consumers in the South America particularly Brazil, Europe, Japan, China, and all around the globe will experience subtle impacts in the global industry market. Energy industry leaders will receive a useful case study of how they can conduct major energy projects in the future. Energy-producing and energy-transit countries around the Caspian will have new choices about how to reach markets. Citizens in the three host countries will experience both indirect benefits (wealthier state coffers) as well as direct benefits – employment, local procurement, community development, and other social investments. All along the way, from the first conceptual discussions in the 1990s to the present day, BTC and its positive impacts have contributed to the economy and people of Azerbaijan, Georgia, and Turkey. Its first delivery of 600,000 barrels of crude oil by tanker to Savona, Italy on 9th June 2006 was just the harbinger of all good things to come in the Caucasus region. As Lord Browne the Group Chief Executive of BP predicted prior to the operation, “We can have a measurable and positive impact on the biodiversity of the world”

Surprisingly, during the course of my research I found this article by Michel Chossudovsky; a professor in Ottawa who was one of the speakers in the Perdana Global Peace Forum held in Malaysia last year:


"Water for Israel.. Also involved in this project is a pipeline to bring water to Israel, pumping water from upstream resources of the Tigris and Euphrates river system in Anatolia. This has been a long-run strategic objective of Israel to the detriment of Syria and Iraq. Israel's agenda with regard to water is supported by the military cooperation agreement between Tel Aviv and Ankara..

The Strategic Re-routing of Central Asian Oil... Diverting Central Asian oil and gas to the Eastern Mediterranean (under Israeli military protection), for re-export back to Asia, serves to undermine the inter-Asian energy market, which is based on the development of direct pipeline corridors linking Central Asia and Russia to South Asia, China and the Far East.
Ultimately, this design is intended to weaken Russia's role in Central Asia and cut off China from Central Asian oil resources. It is also intended to isolate Iran.

Meanwhile, Israel has emerged as a new powerful player in the global energy market.Russia's Military Presence in the Middle EastMeanwhile, Moscow has responded to the US-Israeli-Turkish design to militarize the East Mediterranean coastline with plans to establish a Russian naval base in the Syrian port of Tartus:

"Defense Ministry sources point out that a naval base in Tartus will enable Russia to solidify its positions in the Middle East and ensure security of Syria. Moscow intends to deploy an air defense system around the base - to provide air cover for the base itself and a substantial part of Syrian territory. (S-300PMU-2 Favorit systems will not be turned over to the Syrians. They will be manned and serviced by Russian personnel.) (Kommerzant, 2 June 2006,

Tartus is strategically located within 30 km. of the Lebanese border. Moreover, Moscow and Damascus have reached an agreement on the modernization of Syria's air defenses as well as a program in support to its ground forces, the modernization of its MIG-29 fighters as well as its submarines. (Kommerzant, 2 June 2006). In the context of an escalating conflict, these developments have farreaching implications.. "

And recently, The Independent UK on 2 May 2007 reported; "Lord Browne (born in Hamburg 1948, son of an Army officer and Auschwitz survivor) the chief executive of BP resigned yesterday in the aftermath of a torrid case of sex, lies and perjury. He lost 15m GBP and the right to keep his life private. Now he may face jail"

And now I fathom the business deals done on the back, dirty street.

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