When Giuseppe Verdi composed his famous opera, Nabucco, in 1841, he was probably influenced by a number of things; Italian unification/independence from the Austria-Hungary Empire, his deep sorrow as a religious man for the enslavement of the Jews by the Babylonian King (Nebuchadnezzar) and his urge to take his place among the greatest musicians of the time and making a good living out of it as a son of a farmer. Those who gave the name of the opera, Nabucco, to the natural gas project running in an East-West direction with Turkey at the centre may have been inspired by similar things in a different time; running away from dominance of one state on natural gas pipelines; avoiding a certain type of autocratic influence; bringing more peace, security, prosperity and democracy for the participants. If accomplished, the Nabucco pipeline, also now called by some the ‘Project of the Century’, has the potential to provide many more opportunities than that of the lifeline of ‘Contract of the Century’, the Baku-Tbilisi-Ceyhan (BTC) pipeline. But this possible success still requires a lot of work and many commitments from the actual participants and some extra-regional states like the US.
What Was the ‘Contract of the Century’ For?
Azerbaijan’s first agreement on the development of its Azeri-Chiraq-Gunesli (ACG) offshore oil deposits in the Caspian in 1995 with dominantly western energy companies was once named the ‘Contract of the Century’. Unsurprisingly the new deal of the Nabucco pipeline signed few days ago between five transit countries (Turkey, Bulgaria, Romania, Hungary, and Austria) backed by the EU and the US is also called by a similar name, ‘Project of the Century’.
The ‘Contract of the Century’ was aimed at giving Azerbaijan an alternative to project its economic and social development closer to western models other than those of unclear, often confusing and one-sided post-Soviet Russian models. In other words, it was thought that if Azerbaijan had continued to rely on Russian energy companies and means of energy transportation, it would have been difficult for it to get out of Russia’s economic, political and cultural orbit. The ‘Contract of the Century’ was a way for Azerbaijan and other energy rich states in the region, such as Kazakhstan and Turkmenistan, to break their dependence on Russia. BTC became a subject of rivalry throughout the 1990s and has turned out to be the lifeline of the ‘Contract of the Century’.
Russia worked hard against the ‘Contract of the Century’, the main oil pipeline of which was the BTC. It first declared the ‘Contract of the Century’ was void since the status problem of the Caspian Sea was not resolved. Then Russia developed a new pipeline, the Caspian Pipeline Consortium (CPC), capable of carrying 1.5 million barrels of oil per day from the Tengiz oil fields of Kazakhstan. With the latter, Russia wanted to secure that it would carry most of Kazakh oil via its territory and not to provide much of an option for Kazakhstan and others to use the BTC line. Azerbaijan now exports much of its oil via the BTC while Kazakhstan is still heavily dependent on Russia’s oil pipelines.
Unfulfilled Expectations from the ‘Contract of the Century’
It is true that, like Russia, Azerbaijan has managed to increase its national income, spend more capital on defence and improve mainly the infrastructure of the capital, Baku, while the rest of the country has still suffered from underdevelopment. But, still like Russia, Azerbaijan has become much more rigid in the establishment of democracy in the country. A small elite group ruling the country has increased its power and has continued to scare the people that if they did not vote for them, they would lose whatever they have gained so far in economic and social terms. Also, as energy is the main source of income and is controlled by a small group, the opposition, independent media and civil society were left to struggle for their survival. Similar things can be said for Kazakhstan, too. In the former Soviet energy rich countries, the richer they have become from energy exports and other businesses, the fewer prospects for viable democratic societies have emerged.
Nor has the ‘Contract of the Century’ provided much expected external security for Azerbaijan and Georgia. It has only maintained the status quo established in the early 1990s. The NK issue, the most important security problem of Azerbaijan internally and externally, did not get much attention from the participants of the ‘Contract of the Century’, such as the US, in favour of Azerbaijan in the regional security and geopolitics. It is true the US, Turkey and some other states urged the resolution of the problem, but their efforts did not go beyond what they would have done if there had not been energy business in the region. Even such a big project, a venture that had much been celebrated as the main source of regional security, could not stop the emergence of the war between Russia and Georgia in August 2008. Georgia has now lost two breakaway regions to Russia indefinitely and created more risks for the security of Azerbaijan and the rest of the Caspian states. Can the ‘Project of the Century’, Nabucco, provide the participants with more than what the ‘Contract of the Century’ has been thus far unable to live up to?
Ongoing Russian Opposition
Similar to what once happened, developing CPC against BTC, Russia has now put forward South Stream against Nabucco. This shows its reluctance to keep its hands away from the South Caucasus and the Caspian. Russia has done it not because Nabucco would really impact Russia’s coffer via energy exports away from its territory, but because it can further release a number of countries in Central and Eastern Europe, the South Caucasus and the Caspian from being hugely dependent on Russian gas and political manoeuvring. In order not to lose such influence in those countries, Russia has described Nabucco as a politically motivated venture and advertised that it is doomed to failure due to lack of suppliers for it, a familiar claim that was previously made for BTC. Nevertheless, as it was seen in the process of the development of BTC, Russia cannot do much to prevent Nabucco from being realised. The main difficulty again, as was the case for the long delay of BTC, appears to be stemming from states that are either suppliers of the gas or transit countries or backing the projects externally.
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