by Ahmed Rashid
On the other hand, Unocal's position was closely linked to US policy on Afghanistan that it would not construct the pipeline or discuss commercial terms with the Taliban, until there was a recognized government in Kabul so that the World Bank and others could lend money for the project. ‘We made it clear to all parties from the beginning that the ability to obtain financing for the project was critical, that the Afghan factions would have to get together and develop a functioning government that was recognized by lending institutions before the project could succeed,’ said John Imle.25 Unocal's real influence with the Taliban was that their project carried the possibility of US recognition which the Taliban were desperately anxious to secure.
Both Bridas and Unocal now courted regional powers with influence over the Taliban, particularly the Saudis. In their discussions with the Taliban, Bridas made much of their strong links to Prince Turki. ‘The Saudis had many years of investment in the Afghan jihad and they really thought this pipeline would help the peace process,’ said Bulgheroni. Not to be outdone, Unocal had their own Saudi connection. Delta Oil's President Badr Al'Aiban is close to the Saudi Royal Family, particularly to Crown Prince Abdullah in Abdul Aziz while Badr's brother Mosaed Al'Aiban was a member of King Fahd's court. Thus the competition between Unocal and Bridas also reflected competition within the Saudi Royal Family.
The USA and Unocal had also won over Pakistan. After the dismissal of the Bhutto government in 1996, the newly elected Prime Minister Nawaz Sharif, his Oil Minister Chaudry Nisar Ali Khan, the army and the ISI fully backed Unocal. Pakistan wanted more direct US support for the Taliban and urged Unocal to start construction quickly in order to legitimize the Taliban. Basically the USA and Unocal accepted the ISI's analysis and aims – that a Taliban victory in Afghanistan would make Unocal's job much easier and quicken US recognition.
Apart from wanting US recognition for the Taliban, Pakistan also desperately needed new sources of gas supply. Gas accounts for 37 per cent of Pakistan's energy consumption and the largest fields at Sui in Baluchistan were running out. Pakistan's proven gas reserves of 22 tcf, faced current consumption of 0.7 tcf per year and an annual increase in demand of another 0.7 tcf per year. By 2010 Pakistan would face an annual 0.8 tcf per year shortfall in gas. Islamabad's other options – a gas pipeline from Iran or one from Qatar – were stalled for lack of funding. Pakistan was also desperate for assured supplies of cheaper oil. In 1996 it imported US$2 billion worth of oil, equivalent to 20 per cent of its total imports. Domestic oil production had dropped from 70,000 b/d in the early 1990s to just 58,000 b/d in 1997. The proposed Unocal oil pipeline would not only supply Pakistan, but also turn the country into a major hub for Central Asian oil exports to Asian markets.
President Niyazov also wanted Unocal to start construction immediately and urged Pakistan to force the Taliban to accept the Unocal proposal. Niyazov's wooing of the US began to pay dividends. In January 1997, Turkmenistan signed an agreement with the US oil giant Mobil and Monument Oil of Britain to explore for oil over a large tract of western Turkmenistan. It was the first oil contract Turkmenistan had signed with a major US company as Unocal had still made no direct investment in Turkmenistan.
In November 1996 Bridas said it had signed an agreement with the Taliban and General Dostum to build the pipeline, while Burhanuddin Rabbani had already agreed. That panicked Unocal and Pakistan. On 9 December 1996, Pakistan's Foreign Secretary Najmuddin Sheikh visited Mullah Omar in Kandahar to persuade him to accept the Unocal proposal, but Omar gave no firm commitment. In the classic Afghan manner the Taliban played their cards adroitly, remaining elusive and noncommittal thereby forcing both Unocal and Bridas to up their bids. The Taliban were not just interested in receiving rent for the pipeline route which could be US$100 million a year, but also to involve the oil companies in building roads, water supplies, telephone lines and electricity power lines.
Privately several Taliban leaders said that they preferred Bridas, because Bridas made no demands upon them while Unocal was urging them to improve their human rights image and to open talks with the anti-Taliban alliance the main plank of US policy. Moreover, Unocal was facing the growing feminist movement in the US which demanded that the USA and Unocal suspend negotiations with the Taliban. The UN was also critical. ‘The outside interference in Afghanistan is now all related to the battle for oil and gas pipelines. The fear is that these companies and regional powers are just renting the Taliban for their own purposes,’ Yasushi Akashi, the UN Under Secretary General for Humanitarian Affairs told me.26
Both companies insisted that their pipeline would bring peace, but no Western bank would finance a pipeline in a country at war with itself. ‘The players in the game of pipeline politics must remind themselves that peace can bring a pipeline, but a pipeline cannot bring peace,’ said Robert Ebel.27 The Great Game had entered a new dimension.
∼ 13 ∼
ROMANCING THE TALIBAN 2:
THE BATTLE FOR PIPELINES –
THE USA AND THE TALIBAN
1997–99
The attractive mini-skirted Argentinian secretaries at Bridas headquarters in Buenos Aires had been told to cover up – long dresses and long-sleeved blouses to show as little of their limbs as possible. A Taliban delegation was expected in Buenos Aires. When they arrived in February 1997, Bridas treated them royally, taking them sightseeing, flying them across the country to see Bridas's drilling operations and gas pipelines and visiting the icy, snow-capped southern tip of the Continent.
At the same time, another Taliban delegation was experiencing a different kind of culture shock. They were in Washington where they met with State Department officials and Unocal and lobbied for US recognition for their government. On their return the two delegations stopped off in Saudi Arabia, visiting Mecca and meeting with the Saudi Intelligence chief Prince Turki. The Taliban said they had not yet decided which company's offer to accept. They had quickly learned how to play the Great Game from all angles.1
Both companies stepped up their efforts to woo the Taliban. Bridas received a boost in January 1997 when the International Chamber of Commerce issued an interim court order telling Turkmenistan to allow Bridas to resume its oil exports from the Keimir field. But President Niyazov ignored the decision, refusing to compromise with Bridas. In March 1997 Bridas opened an office in Kabul and Bulgheroni arrived to meet Taliban leaders.
Bridas actually began to negotiate a contract with the Taliban. It took weeks of painstaking work through the summer for three Bridas executives to negotiate the 150-page document with 12 Taliban mullahs, who had no technical experts amongst them apart from an engineering graduate, who had never practised engineering. The Taliban had no oil and gas experts and few who spoke adequate English, so the contract was translated into Dari. ‘We are going through it line by line so that nobody can accuse us of trying to dupe the Taliban. We will get the same contract approved by the opposition groups so it will be an all-Afghan agreement,’ a senior Bridas executive told me.2 Unocal had declined to negotiate a contract until there was a recognized government in Kabul.
Meanwhile Unocal had donated US$900,000 to the Centre of Afghanistan Studies at the University of Omaha, Nebraska which was headed by Thomas Gouttierre, a veteran Afghanistan academic. The Centre set up a training and humanitarian aid programme for the Afghans, opening a school in Kandahar which was run by Gerald Board-man, who in the 1980s had run the Peshawar office of the US Agency for International Development providing cross-border assistance to the Mujaheddin. The school began to train some 400 Afghan teachers, electricians, carpenters and pipe-fitters to help Unocal lay the pipeline. Unocal gave the Taliban other gifts such as a fax and a generator, which caused a scandal when the story broke later in the year.
Whatever Unocal gave to the Taliban only further convinced the anti-Taliban alliance and Iran and Russia that the company was funding the Taliban. Unocal vehemently denied the charges. Later Unocal specified to me what it had spent on the project. ‘We h
ave estimated that we spent approximately US$15–20 million on the CentGas project. This included humanitarian aid for earthquake relief, job-skill training and some new equipment like a fax machine and a generator,’ Unocal's President John Imle told me in 1999.3
Delta's role also increased external suspicions. Initially Unocal had encouraged Delta Oil, with its Saudi origins and Taliban contacts, to woo the Afghan factions. Rather than hiring eminent Saudis to do the job, Delta hired an American, Charles Santos, to liaise with the Afghans. Santos had worked on and off for the UN mediation effort for Afghanistan since 1988, despite criticism from two subsequent UN mediators that he was too close to the US government and had a personal agenda. Santos had become the political adviser to the UN mediator Mehmood Mestiri, who led the disastrous UN mediation effort in 1995, when the Taliban were at the gates of Kabul. Santos was already intensely disliked by all the Afghan leaders, especially the Taliban, when Delta hired him and nobody trusted him. It was a mistake and Unocal later regretted the decision after Santos failed to make any headway with the Afghans despite repeated trips into the country.
As tensions developed between Unocal and Delta because of Delta's inability to woo the Afghans, Unocal set up its own team of experts to advise the company on Afghanistan. It hired Robert Oakley, the former US Ambassador to Pakistan and later the US Special Envoy to Somalia. Oakley had played a critical role in providing US support to the Mujaheddin in the 1980s, but that did not endear him to the Afghans as the USA subsequently walked away from Afghanistan. Many Afghans and Pakistanis considered him arrogant and overbearing – his nickname in Islamabad during his tenure as Ambassador was ‘The Viceroy’. Oakley travelled to Moscow and Islamabad to win support for the project and helped Unocal hire other experts. These included Gouttierre, Boardman, Zalmay Khalilzad an Afghan-American worked for the Rand Corporation and the Central Asian expert Martha Brill Olcott.
For a US corporation to hire ex-US government officials or academics was not unusual. All the US oil companies playing the Great Game were doing the same in order to lobby Washington and they were hiring even bigger names from the Reagan and Bush administrations than Unocal was. But this was not understood in the region and was viewed with enormous suspicion, reinforcing speculation that Unocal was a policy arm of the US government and that the 1980s network of US-CIA Afghan experts was being revived.
Unocal now also faced immense problems with President Niyazov, who was as far removed from reality as ever. Refusing to accept the problems posed by the constant fighting in Afghanistan, he urged Unocal to start work as quickly as possible. When his terrified Foreign Ministry officials tried to explain that construction could not start in the middle of a civil war, he would shout them down. ‘We want the pipeline. We link all of our largest projects to peace and stability in Afghanistan,’ Niyazov told me angrily.4 Subsequently Turkmen officials were too afraid to even inform their boss of the bad news from the Afghan front and Niyazov became more isolated from reality.
Despite these problems Unocal pushed ahead. In May 1997 at an annual regional summit in Ashkhabad, Pakistan, Turkmenistan and Unocal signed an agreement, which committed Unocal to raising the finances and reaching financial closure for the project by December 1997, starting construction by early 1998. The USA and Turkmenistan had been informed by the ISI that the Taliban were on the verge of capturing the northern opposition stronghold of Mazar-e-Sharif. However, two weeks later the Taliban were driven out of Mazar with hundreds of casualties and fighting intensified across Afghanistan. Once again, over-dependence on ISI analysis had embarrased the US.
At the first meeting of the CentGas working group in Islamabad after the débâcle in Mazar, Unocal Vice-President Marty Miller expressed grave doubts that Unocal could meet its December 1997 deadline. ‘It's uncertain when this project will start. It depends on peace in Afghanistan and a government we can work with. That may be the end of this year, next year or three years from now or this may be a dry hole if the fighting continues,’ Miller told a press conference on 5 June 1997. Pakistan and Turkmenistan were forced to sign a new contract with Unocal extending the company's deadline by another year to start the project by December 1988. To most observers even that was considered overly optimistic.
By now, there was growing scepticism in Washington that Pakistan and the Taliban could deliver a unified Afghanistan. As a result, the USA began to explore other options to help Turkmenistan deliver its gas. In a dramatic reversal of policy the USA announced in July 1997 that it would not object to a Turkmenistan–Turkey gas pipeline which would cross Iran. Washington maintained that its decision was not a U-turn on its sanctions regime against Iran. Nevertheless, as European and Asian oil companies scrambled to enter the Iranian market, US companies saw a window of opportunity and intensified pressure on the Clinton administration to ease US sanctions on Tehran.5
The opportunity to transport Caspian oil and gas through Iran made an unpredictable Afghan pipeline even less viable. Washington's decision came as a blow to Unocal and a sharp reminder to Islamabad that US support was fickle at the best of times and that time was running out for the Taliban to unify the country through conquest. Moreover, Iran and Australia's BHP Petroleum announced they would sponsor a US$2.7 billion, 1,600-mile-long Iran–Pakistan gas pipeline that would deliver 2 billion cubic feet per day of gas from southern Iran to Karachi and later to India. The advantage of this pipeline, which was in direct competition to Unocal, was that it would run through territory not devastated by a civil war.
On 16 October 1997 Prime Minister Nawaz Sharif paid a one-day visit to Ashkhabad to talk to Niyazov about the Unocal project. As a result, Unocal, Pakistan and Turkmenistan signed a tentative pricing agreement for the import of Turkmen gas, in which the Taliban were given 15 cents per 1,000 cubic feet as a transit fee for the pipeline across their territory.6By now there was an air of distinct unreality surrounding the decisions by Sharif and Niyazov, who were ignoring the fighting. The Taliban were incensed because they were not consulted about the gas price and they demanded a larger transit fee.
Unocal company announced an enlarged CentGas consortium on 25 October 1997, which included oil companies from Japan, South Korea and Pakistan.7 However, Unocal's attempt to woo the Russians had failed. Although 10 per cent shares in CentGas were reserved for Gazprom, the Russian gas giant refused to sign as Moscow criticized US sponsorship of the Taliban and the undermining of Russian influence in Central Asia.8Gazprom's chief executive Rem Vyakhirev declared that Russia would not allow Turkmenistan or Kazakhstan to export its oil and gas through non-Russian pipelines. ‘To give up one's market … would be, at the very least, a crime before Russia,’ Vyakhirev said.9
US officials had already made their anti-Russia policy clear. ‘US policy was to promote the rapid development of Caspian energy … We did so specifically to promote the independence of these oil-rich countries, to in essence break Russia's monopoly control over the transportation of oil from that region, and frankly, to promote Western energy security through diversification of supply,’ said Sheila Heslin, the energy expert at the NSC.10
Bridas remained in the running, this time with a powerful partner which even Washington could not object to. In September 1997 Bridas sold 60 per cent of its company's stake in Latin America to the US oil giant Amoco, raising the possibility that Amoco could influence Niyazov to ease off on Bridas's frozen assets in Turkmenistan. Bridas invited a Taliban delegation headed by Mullah Ahmad Jan, the former carpet dealer and now Minister for Industries, to Buenos Aires for a second visit in September. Pakistani authorities refused to let the Taliban fly out from Peshawar until they had also agreed to visit Unocal. Another Taliban delegation headed by the one-eyed Mullah Mohammed Ghaus arrived in Houston to meeet with Unocal in November 1997 where they were put up in a five-star hotel, visited the zoo, supermarkets and the Nasa Space Centre. They had dinner at the home of Marty Miller, admiring his swimming pool and large comfortable house. The Taliban met with officials at
the State Department, where once again they asked for US recognition.11
After the winter lull in Afghanistan, fresh fighting broke out in the spring of 1998 and for both companies the project appeared as distant as ever. In March, Marty Miller said in Ashkhabad that the project was on indefinite hold because it was not possible to finance while the war continued. As Niyazov fumed with impatience, Unocal asked for another extension, beyond December 1998, to reach financial closure. Unocal was also facing increasing problems at home. At its annual shareholders’ meeting in June 1998, some shareholders objected to the project because of the Taliban's treatment of Afghan women. American feminist groups began to muster American public support against the Taliban and Unocal.
Throughout 1998 the feminist pressure on Unocal intensified. In September 1998 a group of Green activists asked California's Attorney General to dissolve Unocal for crimes against humanity and the environment and because of Unocal's relations with the Taliban. Unocal described the charges as ‘ludicrous’. Unocal first attempted to counter the feminists and then became distant in trying to answer their charges. It was a losing battle because these were American women and not foreigners, wanting answers to an issue that the Clinton administration now supported.
‘We disagree with some US feminist groups on how Unocal should respond to this issue … we are guests in countries who have sovereign rights and their own political, social and religious beliefs. No company, including ours, can solve these issues alone. Walking away from Afghanistan – either from the pipeline project or our humanitarian projects, would not help solve the problem,’ said John Imle.12
The US bombing of Bin Laden's camps in August 1998 forced Unocal to pull out its staff from Pakistan and Kandahar and finally, in December 1998, it formally withdrew from the CentGas consortium, which it had struggled so hard to set up. The plunge in world oil prices which had hit the world's oil industry also hit Unocal hard. Unocal withdrew from a pipeline project in Turkey, closed its offices in Pakistan, Turkmenistan, Uzbekistan and Kazakhstan and announced a 40-per-cent drop in its capital spending plan for 1999 due to low oil prices. Unocal's only victory in these difficult days was over Bridas. On 5 October 1998, the Texas District Court dismissed Bridas's US$15 billion suit against Unocal – on the grounds that the dispute was governed by the laws of Turkmenistan and Afghanistan, not Texas law.