Guest Column: U.S. Media Turbulence Points to New Day in Central Asian Journalism

Central Asia remains dangerous for independent journalists. In the latest case, Gennadi Pavlyuk, a 40-year-old Kyrgyzstani reporter who was highly critical of the Kyrgyz government, was tied up with duct tape in neighboring Kazakhstan, thrown from a six-floor Almaty apartment balcony, and died Dec. 22d; a Kazakhstan report implicates the Kyrgyz special services. In Uzbekistan, photojournalist Umida Ahmedova faces up to two years in a labor camp for defamation because of a set of 110 portraits called “Women and Men: Sunrise to Sunset,” depicting the lives of ordinary Uzbeks. On the other side of the Caspian, Azerbaijani bloggers Adnan Hajizade and Emin Milli say they have little faith in overturning their 2½-year sentences for hooliganism. The Azeri pair gained attention last July for a video spoof in which Hajizade appeared at a mock press conference wearing a donkey costume.

Nonetheless, Sasha Meyer sees a reason for optimism on the Caspian. It lies, Meyer writes, in the technology that is transforming journalism in the West. His report:

By Sasha Meyer

Typically, the U.S. comes up with new Internet-related innovations, and later the new products, services and trends are used and emulated elsewhere. If this pattern can serve as a rule of thumb, then what's happening in American journalism hints at new ways to support independent news reporting in Central Asia.

Earlier this year, the Project for Excellence in Journalism, reported, ”Power is shifting to the individual journalist and away, by degrees, from journalistic institutions. ... Through search, e-mail, blogs, social media and more, consumers are gravitating to the work of individual writers and voices, and away somewhat from institutional brand. Journalists who have left legacy news organizations are attracting funding to create their own websites.” At least some reporters now enjoy “a new prospect: individual journalists, funded by a mix of sources, offering expert coverage to many places.”

This is similar to what happened in the Silicon Valley in the 1990s, when power shifted from investment firms to engineers, which itself echoed the experience of the movie industry a few decades earlier. As Michael Lewis wrote in The New New Thing, ”Once the studios lost their clout, the stars seized power. And once they'd seized power they raised their price and demanded the right to direct their own pictures.”

This trend is painful for Western journalists. Reforming institutions such as newspapers that have not seen any change since the invention of the telegraph means a lot of jobs will be lost before a renewed industry emerges.

However, for those who support independent news reporting in places like Central Asia, this is good news. A free press and its institutions never took root in the region, thus there is no need to reform anything. Instead, these supporters can focus on new ways to fund local journalists. Again, Westerners offer interesting models to experiment with.

One example is Christopher Allbritton's approach to covering the Iraq war. Here is how BusinessWeek’s Spencer Ante described it: “Albritton didn't have a juicy contract with The Washington Post or CNN. Rather, his trip was funded by 320 people who donated $14,334 through his Web site, Back-to-Iraq.com. Months before the conflict began, the former Associated Press reporter posted a notice on his site: He wanted to cover the war and asked for readers' financial support for ‘independent journalism.’ As the cash rolled in, Allbritton hit the road with his laptop computer, filing via a satellite phone or Internet café. Donors were put on a premium e-mail list, so they received stories early and got extra reports and pictures. They also passed along story ideas and occasionally berated him for overheated metaphors. ‘Readers were my editors,’ he says." Albritton’s website had a peak daily readership of 50,000.

Another example is GlobalPost, an online for-profit startup launched this year, whose stated mission is "to redefine international news for the digital age." Instead of sending reporters abroad, the publication relies on the network of 65 part-time correspondents who are already there. Its subscription service called Passport seeks to make the journalist the central figure, Elizabeth Jensen reported in The New York Times. "It offers access to GlobalPost correspondents, including exclusive reports on business topics of less interest to general audiences, conference calls and meetings with reporters, and breaking news e-mail messages from those journalists," Jensen wrote. Miriam Elder has written on Central Asia for the GlobalPost.

This expansion of the reporters' role, coupled with the trend among U.S. newspapers to outsource foreign coverage, offers new opportunities for journalists in Central Asia. Foundations and NGOs that support independent media in the region can help them to take advantage of these opportunities by providing two missing ingredients: training and marketing.

Strong journalistic skills are still scarce in the region. Oleg Panfilov, director of the Center for Journalism in Extreme Situations, said in an interview that the quality of reporting has much room for improvement. American and European journalism schools could play a role here by doing for journalists in places like Central Asia what MIT has done for engineers worldwide: make course contents available online for anyone to use. The MIT effort called OpenCourseWare has been popular with geeks across the planet and led to similar projects at other schools, helping create an international consortium and a global movement.

Once trained, the local reporters would still need help making themselves known to international news media and gaining credibility and trust, another challenge their Western supporters could help to overcome.

The domestic audience in the region would also benefit, thanks to a form of a cross-subsidy. Working part-time for a foreign publication like GlobalPost would provide the journalist with time and money to research and report for news sites whose audience is ordinary people in the region. Furthermore, the reporter's work published abroad would still reach the region as such content typically gets picked up by local bloggers.

Two Decades Later in Central Asia, Still Awaiting the Revolution

By Sasha Meyer

Western news reports on the revolutions of 1989 have been celebratory. But in Russia the mood has been somber. Russian writers want to know what went wrong. Among them, Sergey Kovalev, a Soviet-era dissident, laments that Soviet dissidents by and large failed to form into an effective political opposition once the Soviet collapse was under way. That thought has been echoed by Aleksandr Podrabinek, who argues that power simply shifted from one group of former apparatchiks to another. Lev Ponomarev distinguishes between two types of dissidents – those who started out the era outside the system, and those who were insiders – and decides that the latter had managerial experience, and it was they who came to power; he cites Aleksandr Yakovlev, Boris Yeltsin and Anatoly Sobchak among them. It is from the confluence of factors raised by all these writers that Russia gets its largely Soviet flavor of governance.

Central Asia, too, has been run the last two decades by such figures – Islam Karimov in Uzbekistan, Nursultan Nazarbaev in Kazakhstan, and so on. The only exception has been Askar Akayev, Kyrgyzstan’s former president. Taking stock of their performance, it’s useful to consider the achievements of what other originally backwater nations achieved in similar two-decade periods of time.

In 1968, South Korea was still a poor country, with a per-capita GDP equal to that of North Korea. Twenty years later, its car makers were selling upscale vehicles in the U.S., the world's most competitive market, and its economy had overtaken Belgium's. Most recently, its Korea Electric Power this week beat out marquee French, Japanese and U.S. consortia to win a contract to build four nuclear power plants in the United Arab Emirates.

In 1986, Vietnam was still reeling from the impact of the wars with China, France, and the U.S. Food shortages were common. A little over two decades later, Vietnam has one of the world's fastest-growing economies. It doesn't just export the usual paraphernalia of international trade: clothing, shoes and appliances. The country is turning into a high-tech hub, hosting IBM's cloud computing facilities and Intel's $1 billion chip-making plant, among others.

In the early 1980s, Turkey had an anemic and quasi-statist economy. Again, a little over 20 years later, Turkish companies make more than half of all TVs sold in Europe. Its apparel such as Mavi jeans are sold at upmarket stores like Nordstrom. Elsewhere, as Hugh Pope writes in Sons of the Conquerors, ”Turkish manufacturers' reputation had grown enough, in fact, that some Chinese clothing designers imitated higher-quality Turkish styles and brands.” The strength goes beyond consumer goods – Turkey has contracted to supply parts for America's F-35, the world’s most advanced jet fighter.

In the meantime, Central Asia has followed a trajectory that resembles Africa's in the years after gaining independence. Passages from Ryszard Kapuscinski's Shadow of the Sun read like today's Central Asia. The gaining of independence, he writes,

“was characterized by a universal optimism, enthusiasm, euphoria. People were convinced that freedom meant a better roof over their heads, a large bowl of rice, a first pair of shoes. A miracle would take place – the multiplying of loaves, fishes, and wine.”

“[But] nothing of the sort occurred. On the contrary. optimism quickly turned to disenchantment and pessimism. The people's bitterness, fury, hatred was now directed against their own elites, who were rapidly and greedily stuffing their pockets.”

“[And] in the years since independence, fundamental human rights were brutally violated by the government. People were denied the right to live in freedom and with mutual respect. They were not allowed to have their own opinions. Organized political gangsterism and the politics of falsehood turned all elections into a farce. Instead of serving the nation, politicians were busy stealing.”

The recent obituary of Omar Bongo, president for life of Gabon, could be a résumé of his Central Asian peers:

Mr Bongo made no distinction between Gabon and his private property. He had ruled there so long, 42 years, that they had become one. It was therefore perfectly natural that an oil company, granted a large concession for coastal drilling, should slip him regular suitcases stuffed with cash. It was natural that $2.6 million in aid money should be used to decorate his private jet, that government funds should pay for the Italian marble cladding his palace, and that his wife Edith's sea-blue Maybach, in which she was driven round Paris, should be paid for with a cheque drawn on the Gabonese treasury. Of the $130 million in his personal accounts at Citibank in New York, it was probable – though Citibank never asked, and nobody ever managed to pin a charge on him – that much of it was derived from the GDP of his country.

The suggestion of fiddling public finances flummoxed and infuriated him. Corruption, he once explained to a reporter, was not an African word. No more was nepotism: He simply looked after his family, supplying them with villas in Nice as well as the ministries of defense and foreign affairs. When French judges in 2009 froze nine of his 70 bank accounts, he was outraged. An attack on him was obviously an attempt to destabilize his country. He was equally indignant when in 2004, after a "Miss Humanity" pageant was held in Libreville, Miss Peru charged him with sexual harassment for summoning her to the palace and, he hoped, to his nifty behind-the-paneling bed. If something was in Gabon, by nature or chance, he evidently had first dibs on it.

To alter the course would be simple. Consider what China did in 1979 – land reform that, by freeing peasants in a largely agricultural society, instantly improved the lot of many, and generated the cash needed to modernize the industry. Not incidentally, it also generated broad public support for the government, and helped to strengthen political stability.

Uzbekistan would achieve a big advance by halting the production of its biggest current crop – cotton – and planting native fruit in its place. Uzbekistan grows cotton – a subtropical, water-thirsty crop – on some 1.5 million hectares in this arid region, earning about $1 billion from exports. On the cost side of the ledger is a massive loss of land to salt, polluted river water unfit even for agricultural use, growing international criticism of child labor during harvest time, and tension with neighbors over water rights from the Amu Darya and Syr Darya. Cotton simply doesn’t pay. As a comparison, Chile earns $1.26 billion from the export of grapes harvested on just 182,000 hectares; it causes no environmental damage, and brings in an additional $1.37 billion from wine exports. All in all, the South American country makes $3.34 billion selling various fruit. Emulating its success in Central Asia should be simple given that the region is home to many varieties of fruit and walnuts. Agribusiness is a serious source of cash even in more advanced economies like Portugal and New Zealand, as well as in high-tech powerhouses like South Korea, which is a top-ten producer of onions. So, far the only place in the neighborhood to adopt this strategy is the neighboring Chinese province of Xinjiang, which exports apples to Kazakhstan and pears to the United States. Xinjiang also exports its products to Mongolia, Japan and Malaysia.

The stumbling block is probably the prevailing mindset among officials in the region. Russian researcher Olga Kryshtanovskaka has found that up to 83% of government positions in Russia are held by former members of the Soviet nomenklatura. The figure for Central Asia is probably higher as its bureaucracy survived the Soviet collapse intact.

Soviet-era writers have been scathing about this upper layer of society, which comprises just 0.1% of the population. Soviet-era writer Michail Voslensky called the nomeklatura “an invisible aristocracy whose reign is more oppressive than that of the czars.” Hungarian essayist György Konrád caustically writes that the nomenklatura often fail economically, trained as they are in a Communist system in which "the more stupid lead the more intelligent, because it has made political reliability a more important job requirement than ability." There is traction to this thinking. For instance, a Western diplomat based in Tajikistan says of local officials in a report by the International Crisis Group, "We are not just dealing with selfishness and greed, but incredible incompetence at all levels.”

The question then is whether there will be new faces in the political elites, and whether they will make a break with Soviet-era attitudes, as has happened in Georgia and to a lesser degree in Ukraine.

Or whether the region will continue to be like Gabon and Egypt – in the former, the new president is the son of the late Omar Bongo; in the latter, the combination of a youthful population bulge and governmental economic incompetence is creating an increasingly religious and conservative society, possibly opening the door to the Pakistani outcome in the longer term.

Giffen Watch: Former Kazakhstan Consultant Cannot Examine CIA Documents

The latest from the federal courtroom hosting the foreign bribery case of uber-middleman James Giffen is that only his lawyers can examine files disgorged from the Central Intelligence Agency. Unless the CIA grants specific permission for a requested document, Giffen himself cannot look at the classified material.

That's from a decision issued by federal Judge William Pauley in New York. The ruling was handed down June 5th, but I haven't seen it published anywhere. At the time of Giffen's 2003 arrest, it was the biggest U.S. foreign bribery case since the law was enacted in 1977.

The 68-year-old Giffen has a long history of business in the Soviet Union and then Kazakhstan. Starting in 1969, he stood as a middleman in deals between American businesses and Soviet enterprises. In 1987, he introduced Chevron to Mikhail Gorbachev, leading to the company's eventual acquisition of the supergiant Tengiz field in Kazakhstan, its single-biggest oil property. After the Soviet collapse, he cozied up to Kazakhstan leader Nursultan Nazarbayev, becoming his main oil adviser and, for a time during the late 1990s, the go-to middleman for any major oil deal in the Central Asian country.

Six years ago, that world came tumbling down when Giffen was arrested at JFK. The charges are that, as Nazarbayev's consultant, he channeled some $80 million in payments from American oil companies to European bank accounts held by the Kazakh president and other leading Kazakhs.

As discussed last month, the CIA documents represent Giffen's last line of defense. He claims that the entire time he was working with Nazarbayev, he was also briefing U.S. intelligence agencies. As effectively a U.S. intelligence asset, Giffen says, he believed his actions were approved by the U.S. But to prove his case, he argued that he required access to classified documents.

The case has been stalled until now over the documents -- most of the time, the CIA simply refused to cooperate with the prosecution; now it is cooperating, but it doesn't want Giffen himself to have automatic access to the classified documents.

In April, Judge Pauley sided with the CIA's position, as channeled through the prosecution. Giffen's lawyers asked him to reconsider; the argument went that Giffen himself might notice aspects of the documents that his lawyers wouldn't.

Pauley ruled against Giffen. The next hearing is Sept. 23d. William Schwartz, Giffen's lawyer, declines to comment.

James Giffen's First Line of Defense Appears to Fall

He may yet be the beneficiary of an intervention the likes of Ted Stevens, or Keith Weissman or Steven Rosen. Short of that, it appears that former Kazakhstan middleman James Giffen is going on trial.

As O&G readers know, Giffen is the most extraordinary of the middlemen whose wiles made the Caspian era work. He was responsible for Chevron, Mobil, Texaco, Phillips and other oil companies getting their deals in Kazakhstan. But in 2003, he was arrested at JFK Airport on bribery and money-laundering charges, and his case has been languishing ever since. At that time, it was the biggest U.S. foreign corrupt practices case in history.

The last time we discussed the case, this former uber-consultant to Kazakhstan President Nursultan Nazarbayev appeared to be succeeding magnificently with his I-was-a-CIA-asset defense. That is, the 69-year-old Giffen asserted that, if he indeed did serve as a channel for some $80 million in oil company payments to the Kazakh president and his pals, as U.S. prosecutors in New York contend, he did so with the understanding that he was serving the interests of U.S. intelligence agencies. It being the time of the ultra-secretive Bush administration, the CIA predictably appeared to drag its heels in producing the top-secret documents that Giffen's lawyers sought in order to prove his case. That was six years ago. Finally, last September, exceedingly patient U.S. Judge William Pauley told prosecutors effectively to put up or shut up. That is, they either had to make their case with the documents, or risk a ruling that Giffen's 6th amendment rights to a speedy trial were in jeopardy. Indeed that seemed to be Giffen's calculus -- he could get some or all the charges dropped if he simply relied on what seemed the most hard-and-fast of the Bush era doctrines, that of scant regard for the Watergate-era laws of a free flow of information.

Until now. The court releases almost no information about the case, treating it almost as cautiously as the Guantanamo detainee cases. Giffen's lawyer, William Schwartz, himself did not answer two emails I sent him for comment. But there are hints on the most recent entries on the case docket.

On April 23, there are two entries. One shows that the CIA has finally produced at least some -- and perhaps many -- of the documents that Giffen sought.

The Agency is still playing coy. Judge Pauley appears to have granted a prosecution request that only Giffen's lawyers -- and not he himself -- be permitted to examine the documents, unless the CIA grants specific permission for specific papers. Apparently U.S. officials do not trust Giffen with such access.

In the second of the two April 23 entries, Schwartz has written a letter regarding Pauley's ruling. One can infer that he is arguing that unless Giffen is permitted to directly review the documents, his defense team cannot be expected to understand all possible hints or references contained within them. Hence, it is another dimension of the fair-trial argument.

Whatever the case, these are mere details. The next hearing is June 4. Giffen can and probably will still mount his CIA defense. But, short of an unlikely plea deal, look for a trial to begin this year.

Nabucco Hucksterism, Iran Pollyanishness, and a $5 Billion Bribe. The Oil and Glory Interview: Steven Mann

On Thursday, a ceremony in the State Department will mark the retirement of Steven Mann, Coordinator for Eurasian Energy Diplomacy, after 32 years with the U.S. diplomatic service. The 58-year-old Mann served most of the last 17 years in senior positions in the Caucasus and Central Asia: He opened the U.S. Embassy in Yerevan in 1992, was ambassador to Turkmenistan, and tried to negotiate a deal between Armenia and Azerbaijan on Nagorno-Karabakh. For the last several years, Mann was America’s man on the spot in the New Great Game on the Caspian Sea.

I visited Mann at his Chevy Chase home. Amid stacked up magazines and books, Mann told me that Europe’s “energy security” is not necessarily at peril. And, for O&G readers, he broke one bit of historical news: Remember the demise of the trans-Caspian pipeline in the chapter An Army for Oil? The one in which then-Turkmen President Saparmurat Niyazov persisted in demanding a $500 million bribe of the Bechtel-General Electric consortium? It turns out that Niyazov originally requested $5 billion. The edited interview:

Q – Does the U.S. need a high-level ambassador on Eurasian energy? And what is your advice going forward?

A – Yes it is helpful. But we also have to get away from Nabucco hucksterism.

Q – What is that?

A – In terms of the wrong lessons learned from [the Baku-Ceyhan pipeline], the wrong lesson learned is to adopt a project and attempt to bring it about through political will. I think so much of the governmental activism on both sides of the Atlantic the last few years has been devoid of a commercial context. There have been quite a number of officials who know very little about energy who have been charging into the pipeline debate. Nabucco is a highly desirable project, don’t get me wrong. But there are other highly desirable projects besides Nabucco. And the overriding question for all these projects is, Where’s the gas?

Q – South Stream was Putin’s response to Nabucco. Did the U.S. blunder by promoting Nabucco before having the commercial context?

A – In terms of whether we are talking EU or US diplomacy, I think you have to be credible. All too often we’ve gotten out ahead of the commercial realities of Nabucco. You have to be able to point to an upstream supply. You have to have a commercial champion. And governments don’t build successful pipelines. Consortia do. The object of any envoy should be to get all those stars aligned before you give the full embrace to any project.

I think Secretary Clinton will bring a more unified focus to the U.S. effort. In the previous administration, we had six special envoys on energy in the State Department, and three deputy national security advisers on the [National Security Council] staff.

Q – Is that too many?

A – It’s four too many in State. And three too many at NSC.

Q – The stated reason for Nabucco is to diversify Europe’s energy supply. Is that a valid enough reason for U.S. involvement? And is European energy security a genuine issue?

A – Anyone who makes that argument knows very little about energy. And I often heard those arguments in the White House Situation Room. Diversification is an objective good. But it can be achieved in ways other than pipelines. The best thing Europe could do for its security is to link its energy grid, which it’s already doing.

Q – Is there alarmism on the subject?

A – The January cutoff of gas through Ukraine only affected 2-3% of European consumers.

Q – So it is overplayed.

A – Yea, I think it was overplayed. What also was underplayed was how successful the Europeans were in shifting gas, linking grids. That’s the untold story of [the January cutoff].

Q – The corollary – that Russian domination of supply equals a political threat in Europe – is that also alarmist?

A – With the EU, I think it’s hard to make that case. That’s the kind of argument that has to be dissected on a country-by-country basis. But Gazprom has been an extremely reliable supplier for 25 years. And I think Gazprom will continue to be an extremely reliable supplier to Europe.

Q – So really one should not be vexed if and when Nord Stream and South Stream are built? And if it takes some time for the ducks to be lined in a row for Nabucco, so be it?

A – Basically, yes. I think Nabucco is far more important to Azerbaijan and Turkmenistan than it is to the EU.

Q – In the late 1990s, there was the initial effort by Bechtel and GE Capital to build a trans-Caspian pipeline from Turkmenistan to Baku.

A – What happened was that Niyazov, with his Soviet mentality, demanded so-called preliminary financing. That is, an upfront payment to do the project. [The consortium] already paid a signing bonus of $10 million. But then Niyazov demanded in the range of $5 billion. Then it came down to $3 billion. And the consortium said, ‘This is utterly unrealistic.’ Niyazov thought they were bargaining. So he dropped the demand to $1 billion; then it came down to $500 million. The consortium said, You have until March 2000 or we walk. And at that time, they walked.

The fundamental problem, and it’s relevant today, is that a foreign investor cannot rely on a governmental entity [in Turkmenistan] to supply the upstream, to supply the product.

Q – Was it ever realistic that Niyazov was going to hook up with the East-West Corridor?

A – It was and it is realistic. Without alternatives to the Gazprom monopoly, Turkmenistan has to accept the price that Gazprom is willing to pay. There is a powerful commercial logic to a trans-Caspian pipeline.

Q – What is the best way today for a Caspian republic to get along in the region?

A – Kazakhstan is a good model of how to develop a Eurasian energy sector. You’re good partners with Russia, but you take advantage of foreign technology and capital.

Q – Does Russia have a role in helping to create a thaw between the U.S. and Iran?

A – Every time there is a substantial political change in the U.S., the oil and gas industry gets up on its tip-toes and says, ‘Aren’t we about to have a change in policy?’ You saw this with the Bush-Cheney election in 2000; the industry thought now was the time it would happen. You saw it after the [2001] invasion of Afghanistan, with certain cooperation and contact between the U.S. and Iran. You’re seeing it now with the advent of the Obama administration. So this is something that the oil and gas industry is always waiting for – that change.

Q – You are saying that this is nothing new.

A – It is nothing new.

Yes, But Will An Obama Visit Put the U.S. Back in the Great Game?

President Obama has told a senior Kazakhstan official that he intends to visit the Central Asian nation, a senior American official has told me. The visit comes as Russia has rolled back U.S. power in the region after a decade in which Washington established military bases there and encouraged the construction of non-Russian energy pipelines to the West.

Yesterday, Reuters reported on a Kazakhstan statement about an invitation issued to Obama by Kazakhstan Senate Chairman Kasymzhumart Tokayev, who is second in the line of power to President Nursultan Nazarbayev.

In an email exchange, a senior Obama administration official confirmed the report. He told me that Tokayev issued the invitation while meeting with the U.S. president in Istanbul this week. Tokayev happened to be in town for a conference called the Alliance of Civilizations, and Obama met him along with a dozen heads of delegation.

On meeting Obama, Tokayev invited him to Kazakhstan. "Obama responded that he knows well the importance of Kazakhstan and intends to visit, but does not yet have a fixed date scheduled to do so," the administration official said. One opportunity would be July, when Obama plans to visit Moscow.

No U.S. president has ever visited any Central Asian country, though the U.S. had a military base in Uzbekistan until it was ejected in 2006, and another in Kyrgyzstan, which is scheduled for closure in July. The closure of the Manas Air Base in Kyrgyzstan came in February after Russia promised the country more than $2 billion in loans.

For an excellent synthesis of the retrenchment of U.S. power, and its replacement by Russia, read this piece by the FT's Charles Clover and two colleagues.

George Keller 1923-2008

George Keller, the former Chevron chairman, who died yesterday in Palo Alto, was an archetype of the intuitive, gambling, technologically driven men who formerly made up the spine of the oil industry. It's not sentimentality to say that one of Big Oil's biggest problems is that today there are none like him at the helm of the five or six top companies.

Keller is famous for the nervy play that created Chevron -- the 1984 purchase of legendary Gulf Oil, described vividly in Daniel Yergin's The Prize. But Keller's vision didn't end there. Just three years later, he made the decision that took Chevron into the Soviet Union, and later into Kazakhstan's Tengiz oilfield, the company's biggest single oil property on the planet.

In other words, when you look at Chevron, you are looking at the house that George Keller built.

Keller was essential to the early research that produced O and G. In the late 1990s, he sat down with me for several hours in his San Francisco office (at the time I was writing for The New York Times out of the former Soviet Union, and he delivered an age-old complaint of parents of grown children everywhere -- he didn't get to talk much to his son Bill, the Times editor, he said. A few years later -- while I was writing O & G at Stanford -- I ran into Bill in downtown Palo Alto; he was in town visiting his father).

Keller told me about the double-knee replacement he just underwent; he planned on being on the tennis courts in a few months. He talked about Chevron's pioneering of Saudi Arabian oil. And he told me about the day in 1987 when he got a call from his much-trusted investment banker, Nicholas Brady, about a fellow named Jim Giffen who had an interesting concept. Keller should give Giffen a hearing, Brady said.

A few days later, Giffen -- a little-known New York promoter of business in the Soviet Union -- arrived in Keller's office. He proceeded to describe to the Chevron boss and his lieutenants how they might acquire an oilfieild in the off-limits Soviet Union -- what Ronald Reagan at the time called the Evil Empire.

Few oilmen would have trusted a fellow like Giffen, who belonged to a class of businessmen -- middlemen -- who usually earned their money by getting between oilmen and the oilfield. But Keller did. He ordered his men to go with Giffen to Moscow. And so began Chevron's sojourn into the Soviet Union.

As in the Gulf deal, if Keller hadn't had the sure instincts of a winning gambler, Chevron would not be the company it is today. Indeed, it might very well have been swallowed up in the waves of mergers that have roiled the industry since.

The CIA, Secretiveness and Jim Giffen's Gamble

Jim Giffen, a New York man accused of passing oil company bribes to Kazakhstan’s president, has asked a federal judge to determine whether U.S. intelligence agencies are purposely withholding documents that the defense says could exonerate him.

In a letter on Giffen’s behalf, his lawyer, William Schwartz, also asks U.S. Judge William Pauley to determine whether his client – whose trial has yet to be scheduled five years after his arrest – has been denied his constitutional right to a speedy trial. Earlier this month, Pauley suggested in court that the delays may have gone on too long.

The Giffen case has attracted attention as the largest Foreign Corrupt Practices Act prosecution since the 1977 law took effect. Kazakhstan President Nursultan Nazarbayev is an unindicted co-conspirator in the case. In Kazakhstan, the case is known as Kazakhgate.

The 67-year-old Giffen doesn’t deny the government’s charges that he passed along some $80 million in payments from U.S. oil companies to Nazarbayev and other officials from the country. But he has invoked a so-called “public authority” defense, asserting that he had reason to believe that U.S. intelligence agencies knew and approved of the payments because Giffen served a useful role for the U.S. as a Nazarbayev confidante. In order to prove his claim, Giffen has requested a trove of documents from the CIA. In an April hearing, a U.S. prosecutor told Pauley that he would produce some of the documents by September.

Giffen in fact had contact with the CIA for more than three decades as a businessman dealing with the Soviet Union and then post-Soviet Kazakhstan. During the Soviet period, he and other American businessmen were effectively required to brief the CIA after visits to the Soviet Union -- it was a price of being permitted to deal with the enemy in a relatively free manner. After the Soviet breakup, Giffen shifted to Kazakhstan, and he continued to make his visits to the agency, something he regularly noted at the time to acquaintances as a seeming sign that he was plugged in at the top in Washington.

In invoking the novel defense, Giffen has seemed at least in part to be gambling that the highly secretive Bush administration would refuse to turn over documents for public review, and that thus some of the charges might be dropped since he couldn't defend himself without the papers. The latest news seems the first indication that the strategy may pay off.

Giffen’s letter – dated Sept. 8 and entered into the court file yesterday – was triggered by remarks made by Pauley in Giffen’s hearing on Sept. 5. In the hearing, assistant U.S. attorney Stephen Ritchen said he didn’t have the CIA documents, and the usually patient Pauley for the first time suggested that the government demonstrate that it is serious about trying the case. He said he might order intelligence officials to appear and explain themselves. According to the latest court docket, Pauley has scheduled a closed hearing Sept. 25, apparently with representatives of the intelligence agencies.

``At some point, the government has to decide whether it wants to go forward,'' Pauley said Sept. 5, as reported in a story by Bloomberg reporter David Glovin, who has covered the case almost from the beginning. ``Oftentimes, there's nothing more effective than having to look at a federal judge and explain why you haven't done what you're supposed to.''

Pauley said, ``Five years -- that in itself is punishment and hardship'' to Giffen. ``I'm reaching the point where I can't let it go on for years.''

Asked why the CIA has not complied with the request for documents, CIA spokesman George Little said in an e-mail response to me yesterday, "The CIA does not, as a rule, comment on matters pending before U.S. courts."

In his letter, Giffen asks Pauley in the Sept. 25 hearing “to determine whether any delays in production to date have been the result of deliberate inaction or indifference on the part of those agencies such that Mr. Giffen’s rights to a speedy and fair trial may have been compromised.”

The Sweep of Georgia's Impact

I'm just back from two weeks in Kazakhstan, looking at the ripples from the events in Georgia. The short takeaway is that Russia's short, victorious war will be felt for years to come all the way from Central Asia to western Europe. Here is the piece in this week's Business Week.



What doesn't seem to be much appreciated is that the main problem isn't really Georgia. It's that Georgia is the thread hanging off the tattered sweater; you pull it, and the sweater falls apart. Not counting the suddenly transformed politics of the Eurasian continent, but just economics, will Azerbaijan and Georgia manage to widen the Caucasus energy corridor to accommodate another 1.5 million barrels a day of Kazakh oil over the coming years, as Kazakhstan would like? What of hopes to diversify Europe's natural gas supply? The answer to both is "perhaps," but that Russia will have to be accommodated.

What would Russia want in exchange for allowing the corridor expansion to go through? For starters, as it's made plain, it wants all of the Azerbaijan state's natural gas supply, the very same volumes that the State Department is pushing President Ilham Aliyev to ship to Europe. As for Kazakhstan, it's not clear what it will be asked -- President Nursultan Nazarbayev, the balancer of great powers, has already been so deferential to Vladimir Putin that one wonders what more there is to surrender. From Europe, Putin would like continued demand for Russian gas at current or greater volumes.

One thing that's sure is that Russia doesn't have to use its Army again. Having deployed it once, Putin has made his point. Besides, Russian energy pipelines provide it all the leverage it needs without its army.

After Georgia, A Day of Reckoning For Washington

Russia says it will start withdrawing its troops from Georgia tomorrow. If that truly happens -- and there are contrary signs -- a new, probably far more important stage of the Georgian crisis will begin. That's the assessment of the affair by the arc of countries -- from Europe, swinging south and east to the edge of western China -- that are directly affected by what Russia does.

How these countries perceive the U.S. response to the war in Georgia will determine whether Russia has effectively crippled a hard-fought, 15-year-old American effort to inject itself as a power in Russia's backyard.

So far, much ink has been spilled over whether the U.S. and Russia are in a new Cold War. In Washington, we hear that the era of a post-Soviet U.S.-Russia alliance is over. The Kremlin counters that the West is intent on provoking it, and thwarting its natural rights as a great power.

The truth is that Moscow's presumptions are essentially correct -- the U.S. has conducted a definitively anti-Moscow policy on Russia's western and southern rims, one dressed up as reformist- and energy-minded, but nonetheless centrally designed to contain Russia within its borders.

But this policy well-suits American security aims, and those of the West as a whole. Conceived in the Clinton administration, it foresaw this very day, when then-forlorn Russia would regain its feet and possibly threaten the independence of its traditional colonial backyard.

One thing to keep in mind is that Russian disgruntlement with Georgia didn't originate with NATO expansion, Kosovo independence, Russia's resurgent petro-power, or Georgian President Mikheil Saakashvili's alleged jokes about Vladimir Putin's height.

Russia's first military attack on Georgia was not ten days ago but in 1993, when Moscow backed Abkhazia in its military separation from Georgia. In the subsequent years, then-Georgian President Eduard Shevardnadze was twice nearly assassinated, attacks that, in interviews with me and others, he blamed on Russia and his insistence on Georgia becoming the strategic transit route for the Baku-Ceyhan pipeline.

In other words, there's strong reason to believe that nothing Saakashvili did, short of capitulation to Russian domination of Georgia, would have satisfied Moscow. Friends tell me that Shevardnadze finally found an accommodation with Russia. If so, it was an accommodation that included the threat of assassination if he went too far.

Georgia wasn't the rationale behind American policy. But the Caspian Sea policy, conceived, as O and G readers know, by a today-forgotten National Security Council officer named Sheila Heslin, did attempt to get Russia accustomed to living within its own borders, and not threatening its neighbors.

The policy was dual. It involved a continuation of the expansion of NATO initiated by President George H.W. Bush, in order to prevent a future, resurgent Russia from gobbling up pieces of the former Soviet bloc in eastern and central Europe. And, on the Caspian, to the south of Russia, the U.S. promoted the construction of energy pipelines to link the Caucasus and Central Asia to the West, and provide them the financial wherewithal to withstand any Russian economic pressure. As a transit point for three of the new pipelines, otherwise-isolated Georgia, situated right on Russia's border, became a U.S. strategic partner.

After 9/11, the Bush administration -- carrying the policy further -- established military bases in Central Asia for the assault on Afghanistan, and then left them in place after the Taliban were dispersed.

The policy made sense considering U.S. interests. The West had a stake in making sure that Russia did not again become a threatening power; by encouraging Russia not to expand back into its former Soviet lands, it might express its nationhood in other ways, such as in business. (For those who see all policy as oil-generated, remember that there was no oil shortage in the 1990s; oil was much-discussed, but it was an instrument of policy -- how to give the Caucasus and Central Asia some breathing room from Russia -- rather than the rationale for it.)

Many of the eight presidents of the region embraced the U.S. agenda. At once, there was a lever against centuries-old Russian dominance.

But ten days ago, Russia put that declaration to the test. With its assault on Georgia, it seemed to expose the U.S. policy as a superpower vanity.

And it seemed true that Washington was caught off-guard. It seemed either to have forgotten the rationale behind its Caspian Sea policy, or, more probable, to have staked its policy on the hope that by now Russia had changed, and would not rotely use its military in the face of a perceived challenge.

Whichever the case, Russia's invasion of Georgia threatens the very real gains of these 15 years. If Russia is seen to have come out ahead, the U.S. may retain its influence in Europe, where Moscow could even suffer a backlash -- Europe could decide after all to build new pipelines to diversify away from Russian natural gas. But America's carefully built role as a great power in Russia's south would be in jeopardy.

The Central Asian and Caucasus leaders are watching.

I myself wonder now whether it matters if Russia in fact does withdraw all the way into Abkhazia and South Ossetia (which I doubt. I think Russia will maintain at least some troops outside the territories. It seems improbable that Russia will entirely give up the ground it gained within Georgia proper.).

Russia has demonstrated that it can and might cross borders of its former Soviet colonies when it sees fit. In Russia's view, these are not international borders; they are Georgia, they are Kazakhstan, they are Azerbaijan -- not real independent states, but former Russian territories.

Ultimately, Azerbaijan's Ilham Aliyev, Kazakhstan's Nursultan Nazarbayev and Turkmenistan's Gurbanguly Berdymukhamedov -- the stewards of the region's great energy wealth -- understand the language of power.

They understood when a parade of American officials visited and argued that it was wise to cultivate a relationship with the most powerful nation on Earth.

The trouble is that, these days, it's not clear any longer that the U.S. is very powerful in its declared zones of strategic interest.

Will No One Have Sympathy for a Fallen Middleman?

Readers of O and G know that Dutch oil trader John Deuss has led a largely charmed life. He earned hundreds of millions of dollars as one of the world's premier oil traders in the 1970s and 1980s. He went into oil drilling in the U.S. and Nigeria. And, in terms of the Caspian, he was in the middle of one of the era's high-tension geopolitical gambits, tying up Chevron for a couple of years in the construction of a big oil pipeline from Kazakhstan's Tengiz oilfield. To get him out, Chevron had to muster the combined weight of the U.S. government, the World Bank, and the European Bank for Reconstruction and Development. Still, it required the death of his chief patron in the Sultanate of Oman before he finally threw in the towel, and went on to new adventures. Here he's pictured in the 1970s, when he ran his own magazine, called Chief Executive.

But the jet-setting life seems over for Deuss, who for almost two years has been embroiled in legal trouble in the Netherlands and the U.K. in an investigation of his banking activities in Bermuda and Curacao. I'm told he's not living the high-life any longer. And a court in Bermuda recently rejected his latest effort to clean up his name.

One problem is that he can't seem to cash out of the accouterments of big wealth. His 187-foot sailing yacht Fleurtje, on which he wined and dined western oilmen during the Caspian era, has been on sale for about $14 million since late 2006. No buyers.

He's had no better luck in the sale of Windsome Farms, his uber-luxurious, 123-acre estate and champion horse-raising facility in Wellington, Florida. One O and G reader tells me it's going for $62 million. But an ad says Deuss wants $49 million. Whatever the case, you must take a peek at the photos in the link. It looks pretty relaxing (as does the yacht). Here's a map of its location.

Perhaps one of the Caspian's nouveaux riche is looking for a ready-made throne?

The Children of the Autocrats

Last summer, Timur Kulibayev, Kazakhstan President Nazarbayev's son-in-law, was fired from his position atop Samruk, the fund that invests the country's oil earnings. Then, he vanished from the public eye. That didn't seem all that important -- after all, Kulibayev was always an exceedingly low-profile official despite directing Kazakhstan's oil industry, and also the Nazarbayev family wealth. Even when rumors started that Kulibayev was in serious trouble with his father-in-law, one recalled previous occasions when Nazarbayev removed family members from positions of importance, only to restore them a year or two later.

Yet, I raise Kulibayev because a story from the British tabloid News of the World has been circulating the Internet about a London-based Kazakh socialite who has recently given birth to his son. Despite the story's yellow-press providence, I'm told reliably that it's essentially true -- the woman, a former Oxford University student named Gaukhar Berkalieva (pictured with Kulibayev), did give birth in December to a boy named Adam, and Kulibayev is indeed the father. (The story rated tabloid real estate because Berkalieva, who goes publicly by the name Goga Ashkenazi, had a couple of dates with Prince Andrew; in addition, the paper somehow obtained topless shots of her.)

As we learned in trials and news conferences last month, Nazarbayev has exiled his other son-in-law, Rakhat Aliyev, over alleged crimes that make the Alexander Litvinenko affair look mild. Aliyev is accused of smuggling all manner of weapons, radioactive materials and poisons into Kazakhstan, with the goal of overthrowing his father-in-law and seizing power. Aliyev lives in Austria, where he depicts himself as a democratic oppositionist.

So is Kulibayev in a fix over humiliating Nazarbayev's second daughter? Perhaps not, since Kulibayev was included on the official guest list to pass the Olympic torch in Almaty a couple of days ago. And Nazarbayev himself has done a similar thing, fathering a daughter with Gulnara Rakisheva, a former stewardess from the presidential jet. Whatever the answer, it will be important for those wishing to do oil business in Kazakhstan.

Azerbaijan's Heydar Aliyev managed to shepherd his gambling-and-drinking son Ilham into respectability and eventual succession into the presidency. And Uzbekistan's Islam Karimov is said to be trying with his daughter, Gulnara.

But what of Nazarbayev's successor? If he does consider his position dynastic, who is left?

What's the Book About?

Shawn Miller of Critical Compendium had a slew of questions about The Oil and the Glory. Here is his interview.

Becoming Quieter on the Caspian

The prize in the Pipeline War is Turkmenistan. Russia and China -- especially the former -- are far ahead of the West in the contest. One reason has been their willingness to look the other way on the issues of human rights, rigged elections and presidents for life.

Chris Chivers of The New York Times weighed in over the weekend on the American response, which is to lower the volume on the moralizing.

There has been a U.S. policy shift on the Caspian, and that's to tell the presidents that they don't have to be like Norway to get along with Washington. As long as they stay on the good-behavior -end of the spectrum of the generally badboy former Soviet states, they're all right.

Some quiet diplomacy is needed in the region. The U.S. is right to give the benefit of the doubt, for instance, to Turkmen President Gurbanguly Berdymukhamedov as long as he continues to methodically dismantle the legacy of his predecessor, Saparmurat Niyazov.

The aim of the U.S. policy is to help to continue to carve out some long-term breathing room for the region from Russia by championing the trans-Caspian and Nabucco natural gas pipelines to Europe. So far, Turkmenistan has been more favorable toward Russia's competing system, the Nord Stream and South Stream pipelines.

Yet there's a line not to be crossed.

One is pandering. Chivers provides an astonishing public remark by Julie Finley, U.S. ambassador to the OSCE. Speaking to Kazakhs in Europe a couple of years ago about their seizure of unflattering newspapers, Finley said, “Maybe you saved some readers some waste of time, anyway.”

And a second is Uzbekistan. Chivers describes a recent visit to Tashkent by the apparently irrepressible Admiral William Fallon, commander of the U.S. Central Command. Fallon is seeking to help thaw currently frozen relations with Uzbekistan's Islam Karimov, who holds the distinction of being the former Soviet Union's most brutal dictator.

“I told them that we couldn’t do much about the past, but that we could look at the future,” Fallon said of his discussion with the Uzbeks.

With respect, that's incorrect, Admiral Fallon. There is no respectable future relationship with Karimov until, for starters, he proves that he has stopped torturing and killing his people.

Unlike some of the region's other leaders, Karimov took no road to post-Soviet ruthlessness. He began there. My own initial sign of that was back in January 1992, two weeks after the Soviet collapse, when I crossed the street from the Hotel Uzbekistan to talk to the Pulatov brothers at Birlik, the then-Tashkent-based opposition group whose office was across the street. At the bottom of the stairs was a pool of blood. Inside, I learned from the more active of the two Pulatovs -- Abdumanop -- that his brother Abdurahim had been knocked on the head with a pipe by an unknown assailant.

The situation has declined since. Karimov regards entreaties by westerners such as Fallon not as an opportunity to re-open a perhaps positive economic path for his people, but a display of weakness, evidence that he still calls the shots in the dance with the foreigners.

It will probably require Karimov going the way of Niyazov before normal relations with the West can resume.

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Rights: Creative Commons

Come Clean, Horelma

Mikhail Gorbachev is the latest to be drawn into the absurd story of the $97 million sale of London's Toprak Mansion. Last week, the former Soviet leader was feted at the 23,000-square-foot house by the real estate agent who sold it to a person he calls Hourieh Peramaa, supposedly a Kazakh refugee who fled the Central Asian country at the age of 17 in 1950 or 1951. Her husband is identified as Horelma Peramaa.

Here's how Kevin Sullivan at The Washington Post describes the party and a Persian beauty who is identified as Hourieh's daughter-in-law: Yassmin, 33, an elegant and towering woman in a remarkable red "hello, boys" dress, worked the room but politely declined to comment when approached by a reporter.

All right, folks, does anyone know a Kazakh named Hourieh? Why does this woman never speak? How did she cross one of the most secure borders in the world during Stalinism?

And who really owns that mansion?

Bill Clinton on the Caspian

Jo Becker and Dale Van Natta at The New York Times weigh in today with a first-rate investigative piece on how deals are really done on the Caspian. It's on a no-name (at least on the Caspian) Canadian entrepreneur called Frank Giustra who bagged a huge uranium deal in Kazakhstan in 2005, then two years later sold his previously miniscule mining company for $3 billion. How? It helped that Giustra walked into Kazakhstan President Nursultan Nazarbayev's door with former President Bill Clinton. It's a troubling account, made more so since both Clinton and Giustra make what could be innocent meetings and deals appear like something more by denying the details until confronted with evidence otherwise.

Horelma and the Six-Foot Beauty

The British press says it has resolved the mystery of the Kazakhstan buyer of a 50-million-pound ($97 million) London mansion about two weeks ago. As readers of this blog recall, the British newspapers reported that a Kazakhstani named Horelma Peramam had made the largest new property purchase in British history. The trouble was that I and no other O and G reader had ever heard of such a Kazakh name, nor any other similar Central Asian name.

Here is the answer, say the British newspapers. Her name is Hourieh Peramaa, and she is a 75-year-old, diminutive woman who fled from Kazakhstan at the age of 17, and ended up in an Iranian refugee camp. There she met a medical student named Horelma, whom she married, and ended up a billionaire by investing quietly in real estate across Iran and Europe.

Call me a skeptic. This would mean that Hourieh crossed into Iran in 1950 or 1951, when Stalin was still alive. If she reached Iran, she crossed either from Turkmenistan, or sailed over the Caspian and fled across from Azerbaijan, among the most policed borders in the world.

Now, I actually have spoken with Uzbeks in the northern Afghan city of Kunduz whose families fled Tajikistan and Uzbekistan during the Basmachi rebellion in the late 1920s and early 1930s. They hired "dog men," as they called these gentlemen who hung out in the Amu Darya River wearing dog skin, and for a price smuggled people into Afghanistan.

Did these dogmen still exist two decades later? Or their equivalent? I'm sure that I'm missing something here and am ready to stand corrected.

This said, Hourieh did a wonderful job of public relations by trotting out her striking, 6-foot-tall daughter, Yasmin (pictured above), to tell the tale.

Horelma! Horelma Peramam! Stand Up and Be Counted

The Kazakhstan billionaire Horelma Peramam has just spent 50 million pounds ($97 million) in the largest new residential property sale in U.K. history. Good ol' Horelma bought the Toprak Mansion on London's The Bishops Avenue, with its seven bedrooms and four kitchens.

Only, who is Horelma? I'm no slouch on Kazakhstan wealth, and I've never heard that name. Neither have any of a multitude of friends who have emailed asking about this fellow. A Google search pulls up 2,800 listings. All of them about this land sale.

What nationality is Peramam? It's definitely not Kazakh, or any other Turkic nationality that I've heard of. Not Slavic. Not Korean. Not German.

How about pseudonyms? Is it someone from Kazakhstan's first family?

Guesses are welcomed.

Why Russia is Winning the Pipeline War

Vladimir Putin.

That's how Russia today made another advance in one of the most important battles under way anywhere in the world at the intersection of commerce and geopolitics -- for control of the natural gas market between Central Asia and Europe. This battle will decide who dominates the European energy market, and obtains commensurate political leverage in Europe and Central Asia. Russia already supplies more than 30% of Europe's natural gas and oil.

In another example of the role of personal diplomacy in the battle, Putin was in Sofia today and signed a deal nailing down Bulgaria's role as the principal transit point for the South Stream natural gas pipeline, which is meant to cement Russia's dominance of southern Europe's gas supply.

Putin had previously used the prestige of the Kremlin to push through plans for a separate pipeline serving northern Europe, called Nord Stream. And last month, he secured the natural gas supply required to feed the two lines. Turkmenistan and Kazakhstan sold a large portion of their natural gas supply for the next thirty years, and agreed to a third pipeline to take their natural gas to Europe.

One would hardly know that Russia has a competitor in this epic market battle. But it does -- the West, specifically the European Union and the U.S., which have advanced their own dual-pipeline idea. They are a proposed trans-Caspian natural gas pipeline, also starting in Turkmenistan, and hooking into a proposed Nabucco pipeline into Europe.

How is the Western effort faring? It's stalled at the starting gate. Indeed, while Putin personally jets around the world, wining, dining and flattering the presidents of other nations whose favor is required, no Western leader has invited any of them for a personal meal. The U.S. hasn't even managed to select a senior statesman to lead the effort since Thomas Pickering dropped out and decided to stay in the private sector.

If it were not for the way that post-Soviet history has been so topsy-turvy, with a winner one day ultimately losing, I'd say the battle is over. For starters, it's high time for Turkmenistan President Gurbanguly Berdymukhamedov to spend some time at Camp David.

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Rights: Creative Commons

Two Hours in Astana

My mother's lawyer boyfriend once offered up some legal advice when I was in a dispute with a contractor: It'll all be settled on the courthouse steps. In other words, even though logic says it's less stressful to resolve one's differences at once, and the final deal often doesn't differ much from what's offered along the way, the actual practice is that one or both parties simply won't walk over the line until the very last possible moment.

So it apparently was yesterday in a settlement of the months-long dispute over the supergiant Kashagan oilfield. Recall that new development of this 13-billion-barrel behemoth has been stalled since the summer over a five-year delay in first oil, and a huge cost overrun.

Take a look at the timeline of the weekend events. At the invitation of Kazakhstan's Nursultan Nazarbayev, the chairmen of most of the world's biggest oil companies had readied to pile in to the capital of Astana for a resolution last Friday. They were put off for two days before meetings finally commenced. The trouble was already apparent when Christophe de Margerie, CEO of France's Total, met with the state oil company on Saturday, then simply left town; that's something that a CEO simply doesn't do when an important president has summoned you.

That left Exxon CEO Rex Tillerson, Eni's Paolo Scaroni and Shell's Jeroen van der Veer meeting for nine full hours -- until midnight -- at a restaurant with Prime Minister Karim Masimov.

At 1:56 a.m. today local time, Bloomberg's Nariman Gizitdinov and Lucian Kim filed the following lead paragraphs in a story:

Eni and partners failed to reach an agreement with the Kazakhstan government over stakeholdings in the Kashagan oil field, Eni Chief Executive Officer Paolo Scaroni said, adding he doesn't expect to return to the central Asian nation ``for a long time.'' ``We haven't reached an agreement yet,'' Scaroni said in an interview early today in Astana, the Kazakh capital, after a nine-hour meeting with Kazakh Prime Minister Karim Masimov and the chief executives of companies including Exxon Mobil and Royal Dutch Shell.

Less than two hours later, at 3:49 a.m. local time, Reuters filed the following:

Kazakhstan's KazMunaiGas has reached a deal with an Eni-led consortium over developing the giant Kashagan oil field which will give it an equal share in the project with the largest shareholders. In a statement, the Kazakh company said all companies in the consortium … had agreed unanimously to the new terms.

What happened during those two hours?

The deal on the courthouse steps. Here is a pretty good Bloomberg piece on the deal. Here's Guy Chazan's from The Wall Street Journal.

By the look of things, Masimov and the state oil company pushed matters pretty far and seemed so unlikely to budge that, to put it bluntly, the CEOs of both Eni -- the field operator -- and Total threw up their hands.

At which point Nazarbayev probably stepped in and told his negotiators to agree more or less with the last deal on the table. This is conjecture, but seems likely in the context of how previous disputes in Kazakhstan have been settled.

“Now, a fair decision has been made,” the president’s official web site quoted him as saying in a meeting with company representatives today after the resolution was announced. He said, “After long and difficult negotiations, the Kazakhstani side has protected its interests. … We have prevented a breach of the contract, which was possible if we did not agree.”

Takeaways from the deal: According to The Wall Street Journal, the companies will make an immediate, good-faith payment of $300 million to Kazakhstan. Over the life of the contract, which expires in 2041, they will pay an additional $5 billion to the country, depending on the price of oil. And they will begin to pay the money earlier than previously agreed.

Kazakhstan will pay a sweetheart price of $1.78 billion for about 8% of Kashagan, raising its share of the field to 16.8%, the same as Total, Shell, Eni and Exxon.

After Kashagan comes on line in 2011, Eni will lose operatorship. Kazakhstan appear to have won the final say on how the field is run, with the four top shareholders divvying up duties for developing it.

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Rights: Creative Commons

Electricity in Kabul and (Don't Hold Your Breath) Possible Reconciliation in Kazakhstan

Lights in Kabul: The Associated Press has an excellent story on one reason why Afghan President Hamid Karzai and the U.S. can't get much political traction in that country -- six years after the Taliban were dispersed, Kabul has just three hours a day of electricity at this time. Though I've been tracking Afghanistan since first going there almost two decades ago, I had no idea that the standard of living in the capital was still so miserable. There's a simple rule I learned talking to people in the Caucasus, Central Asia, Afghanistan and Pakistan -- if you want political support, give them simple things like electricity, clean water, schools, roads and hospitals. (tip to The Oil Drum)

Kazhegeldin to return? The opposition blogosphere in Kazakhstan is lit up with new reports that former Prime Minister Akezhan Kazhegeldin is -- this time really -- returning to Kazakhstan a decade after going into exile. I'm told that this time the talk could be serious. Recall that it's Kazhegeldin who has single-handedly made President Nazarbayev's life miserable over the last decade. Well, not entirely single-handedly -- Nazarbayev himself has played a role with his clumsy handling of rival and critical voices. Yet Kazhegeldin financed the information war in Washington and London that led to a plummet in Nazarbayev's reputation in the West through the revelations of what became known as Kazakhgate. In terms of post-Soviet pocket-lining, we're not talking big numbers -- American businessman Jim Giffen is accused of channeling about $80 million in oil company payments to the numbered bank accounts of Nazarbayev, his family and associates. But it shocked, shocked Washington to see actual evidence that its allies have power AND money aspirations, and moreover that they (listen up) rig their elections! Kazhegeldin and Nazarbayev have had secret talks numerous times over the years, but until now have not managed to reach agreement on Kazhegeldin's return. One main issue has been the very real apprehension that Kazhegeldin could be imprisoned or killed.

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Rights: Creative Commons

Planespotting Putin, Musharraf and Nazarbayev

What do these three heads of state have in common? All have had their executive aircraft -- those luxury suites on wings on which they travel the world -- photographed and logged by amateur plane-spotters.

This is good fun. But these hobbyists can also break news. For instance, the latest issue of Foreign Policy has a piece about a possible six-year European shopping spree by Tunisian First Lady Leila Ben Ali. Tunisian bloggers have tracked the north African country's presidential aircraft all over Europe, while noting that reclusive leader Zine el-Abidine Ben Ali almost never leaves his office. They don't seem far from putting two and two together.

The on-line Foreign Policy piece considerately explains how to get started tracking the movements of presidential planes using sites such as Airliners.net. How about the aircraft used by Vladimir Putin? Or the plane used to fly Nursultan Nazarbayev? How about Pervez Musharraff's aircraft?

The movements of the presidents themselves aren't that interesting. After all, that's well-covered by the media. But it could be grist for trackers of first family wealth and spending habits.

Report: What the Kashagan Deal May Look Like

Milano Finanza, the daily in the home city of Italy's Eni, is reporting the skeleton of a final settlement of the Kashagan dispute that includes a surprising sweetener for holdout Exxon. The report quotes no sources. I found Thompson Financial's pickup of the piece but not the original.

With at least 13 billion barrels of proven reserves, Kashagan is the largest discovery in the world in the decades. New work there has been suspended for months in the dispute over a five-year delay in producing first oil, and a huge cost overrun.

The basics of the agreement as reported by Milano Finanza are a $3.5 billion fine and relinquishment of a total of about 8% of the supergiant field, which would double Kazakhstan's stake to about 16%, equivalent to top shareholders Eni, Exxon, Shell and Total.

But that's been more or less known for months. The more interesting part is that Exxon -- the squeaky wheel -- may have gotten a bit more than anyone else for its hard-nosed stubbornness. Recall that Exxon has been the holdout for weeks, seeking to make clear that, unlike its rivals, it's no pushover.

The report says that Exxon will receive unspecified new exploration rights plus an extension of the longevity of its deal at Kashagan's sister field, Tengiz. If that's accurate, one has to applaud the company. It would mean that it continues to challenge the newly powerful petro-states and at key times be treated differently from its competitors. Recall that so far it's the only major not to buckle under pressure in Russia.

Confirmation of the settlement may be known Friday, when Kazakhstan's President Nazarbayev has called together the representatives of all the foreign partners. When he makes such moves, he usually has the terms of a deal in mind.

Update: Gabriel Kahn at The Wall Street Journal reports that the Nazarbayev meeting is delayed until at least Sunday.

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Rights: Creative Commons