Guest Column: Iran's Cold Winter

By Paul Sampson

Iran is in the grip of an energy crisis that has left homes without heating and electricity, forced the temporary shut-down of power plants, and even led National Iranian Oil Co to stop re-injecting gas into its onshore oilfields. How could this happen in a country with the world's second-largest oil and gas reserves, you might ask?

First, this year's winter has been the coldest in a half century; Turkmenistan cut gas supplies to Iran at the beginning of the year in a pricing dispute; and, President Mahmoud Ahmadinejad reacted very slowly to a national emergency.

Iranians I've spoken to say the trouble with Turkmenistan was entirely avoidable. Last autumn, Turkmenistan said that in 2008 Iran would have to remit much more than the $75 per 1,000 cubic meters, the extremely low price it had been paying. But rather than deal (what even Russia's Gazprom when the Turkmen raised the same gripe), the Iranians dug in their heels and -- hey presto -- had the taps turned off.

The Turkmen pipeline supplies remote northern Iran villages that are cut off from the mainland, so there was always going to be a problem. But, as the freezing weather started to bite, the problem became a full-blown crisis.

For Ahmadinejad, whose handling of the economy has been woeful at a time Iran is being squeezed by US-led sanctions, the energy shortages should be an embarrassment. Some analysts predict he'ill pay for his shortcomings with a hammering in next month's parliamentary elections, where his conservative rivals are expected to gain ground.

But don't bet on it; friends in Tehran have said over the past few days that Ahmadinejad is as confident as ever and, backed by the all-powerful Supreme Leader and his friends in the Revolutionary Guards, is setting his sights on being re-elected in June.

For some Iranians, that would be the last straw.

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Russia's New Abbott and Costello Defense

Vladimir Putin -- listen up.

You now have an airtight defense against those who have savaged you ever since you temporarily cut off natural gas shipments to Europe a couple of years ago in a pricing dispute with Ukraine. It would make Abbott and Costello proud.

Last week, Turkmenistan made news by cutting off natural gas supplies to Iran. The Central Asian nation, the runt forever being picked on by neighborhood bullies, had been shipping 23 million cubic meters a day to Iran, but is tired of being short-changed by Russia and Iran for its natural gas and wants more money. Russia is now paying $130 a thousand cubic meters (versus $350 it plans to charge Europe); Turkmenistan presumably wants at least that much from Iran.

Here's where the story gets wind. You see, even though Iran buys natural gas, it also sells it. But this is an incredibly cold winter, and Iranians are freezing. The country needed those Turkmen imports. So it has cut off Turkey, which was supposed to receive 30 million cubic meters a day from Iran but is only getting about 5 million.

Except it's also mighty cold in Turkey. So it has cut off Greece.

The poetic coda? The rescue squad is from Russia. Gazprom, the lightning rod for things that go wrong across Eurasia, is shipping an extra 8 million cubic meters of natural gas a day to Turkey and 1.5 million cubic meters a day to Greece.

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Finally, Some Sanity on Missiles

The U.S. proposal to install an anti-ballistic missile shield in eastern Europe appears unlikely to advance under the watch of its conceiver, President Bush. The new Polish government says it won't permit the shield right now because it's not clear that the next U.S. president will want it, and meanwhile it's not worth aggravating Russia.

Bush wants to place components of the shield in Poland and the Czech Republic. Russia's Vladimir Putin has opposed it, and Polish Foreign Minister Radek Sikorski has provided his government's position in an interview with the Polish newspaper Gazeta Wyborcza. They were kindly passed on in an article yesterday by Judy Dempsey at The New York Times.

Poland's shift is gratifying news for those like myself who think that there are so many divisive issues on the table with Russia that there's no reason to add another, especially when the shield is unreliable at best when decoys are used. When the shield definitely works, let's talk deployment.

The Polish position is built on multiple levels. It's tied up with Moscow's plans to build the Nord Stream natural gas pipeline from Russia to Germany, crossing the Baltic Sea and averting nations with which Russia has tense relations, like Poland.

Polish Prime Minister Donald Tusk wants Russia to reconsider Nord Stream. If the gas continues to cross Poland, Russia would find it harder to cut off the country during predictable periods of strained relations. Poland has also raised environmental concerns about installing a pipeline in the Baltic.

Anti-Missile Defense and Iran's Nuclear Intentions

Two bits of news deserve the rubric: How far do you intend to push this game of chicken?

Missile Defense: U.S. anti-missile defense policy has been misguided. It continues to argue the system’s merits for placement in Poland and the Czech Republic despite the failure of the technology so far when decoys are employed. Yet Russia has been similarly imprudent. Its latest rhetorical fusillade comes from Armed Forces chief Yuri Baluyevsky, who said over the weekend that any missile fired from the anti-ballistic system could inadvertently trigger an automated strike by Russia’s own defenses. Vladimir Putin has been vocal but articulate. Baluyevsky’s remarks, by contrast, are Soviet-era blather.

Iran: And now is the news that Russia has delivered the first nuclear fuel rods to an Iranian power station that’s at the center of Western concerns regarding the country’s enrichment of uranium. In statements today, Russia and Iran confirmed the shipment to the plant near the city of Bushehr. The plant can start six months after the final shipment is made, and it’s not clear when that will be. Meanwhile there’s talk in Russia and the West that this is part of Putin’s plan to get Iran to cooperate with international inspectors, and stop enriching uranium. I’ve argued previously that Putin would like to win the diplomatic prestige to be accorded any person who can resolve the Iranian-Western standoff. Putin must be confident of what he’s doing. But it’s a perilous game.

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Blow to Bush: Russia Says No New Sanctions on Iran

Russia today joined China in a public rejection of the Bush administration's effort to increase sanctions on Iran. In Moscow, Russian and Iranian officials announced that they moved closer to finalizing Russian construction of a $1 billion nuclear power plant near the southern Iranian city of Bushehr.

The agreement in itself is unimpressive -- another of those interim pacts in which the parties agree to do something later, in this case to finalize a timetable for completing the plant, which is at the heart of Western concerns about Iran's uranium enrichment program.

But it puts meat on Vladimir Putin's resistance to further Iranian sanctions after a U.S. intelligence estimate last week said Iran had stopped trying to develop nuclear arms four years ago. The Bush administration has continued to push for stepped-up sanctions, saying the new intelligence doesn't mean that Iran is less dangerous.

The Russian position makes it even harder for Bush to get agreement since China on Sunday made its feelings on the matter known when Sinopec, the Chinese oil company, signed a $2 billion oil contract with Iran.

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China Replies: No New Sanctions Against Iran

China has replied to President Bush’s request for a tougher global stand against Iran. Sinopec, the Chinese company, today signed a $2 billion contract to develop a supergiant Iranian oilfield called Yadavaran.

The field is impressive, with an estimated 3 billion barrels of recoverable reserves. But the lousy terms show that Iran is still in the driver’s seat. Still insisting on fixed profit rather than the industry-standard big-risk-big-possible-reward formula, Iran gave Sinopec just a 14.98% rate of return.

In addition, production will be extremely slow. The contract calls for just 185,000 barrels a day. By comparison, the BP-led developers of next-door Azerbaijan's offshore – which contains just under twice Yadavaran's reserves – plan to ship 1.5 million barrels a day when it’s at maximum production in the next decade.

But the message is clear. The U.S. has lost the punch of its main claim against Iran – that it’s trying to build a nuclear bomb; a fresh intelligence estimate says that Tehran stopped doing so four years ago. So that has made it difficult for Bush to step up the isolation of Iran in what he asserts is the best way to get it to halt its enrichment of uranium.

China’s action shows that Iran will find ways around the western embargo.

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Diplo-Capitalism: Bush's Clintonian Iran Strategy

One needn't be a gene physicist to see that President Bush looks a lot like -- gulp -- former President Clinton these days. He's hosting Israeli-Palestinian talks, speaking with Syria, and now we hear that he's opened a pen-pal exchange with the mother of all totalitarians, North Korea's Kim Jong Il.

As my former Wall Street Journal colleague Jay Solomon notes today, neo-con John Bolton hates this shift. "Our foreign policy is in free-fall at the moment," the former U.S. ambassador to the U.N. and advocate of uni-polar diplomacy tells Solomon. Engaging dictators, Bolton says, will only "diminish our prestige and influence."

Bah humbug.

So what's next in Bush's embrace of the foreign policy he's spent seven years deriding? Adoption of Clinton's diplomatic two-step with corporate America?

As readers of this blog know, I see one of America's most triumphant foreign policies of the last decade as the successful linking of the Caspian and Mediterranean seas through the Baku-Ceyhan oil pipeline. When this million-barrel-a-day came on line last year, it cemented a decade-long challenge to Russian suzerainty in Central Asia and the Caucasus.

And it was all a joint diplomatic-commercial effort of Clinton administration officials and Big Oil, specifically BP, Pennzoil and a few other companies. It was cutting-edge stuff -- geopolitics at the intersection of diplomacy and commerce.

Now it seems Bush is following the same tack. Today my friend Dean Rose was kind enough to pass along a transcript of Bush's news conference this week on the fresh intelligence that in fact Iran stopped seeking development of a nuclear weapon four years ago.

Bush said he's working to get companies both in the U.S. and abroad to help persuade Iran to stop enriching uranium. One presumes Bush was talking about oil companies -- what other type of company would he be describing?

Here's Bush's direct language when asked what's next in U.S. policy on Iran:

"And I believe now is the time for the world to do the hard work necessary to convince the Iranians there is a better way forward. And I say, hard work -- here's why it's hard. One, many companies are fearful of losing market share in Iran to another company. It's one thing to get governments to speak out; it's another thing to convince private sector concerns that it's in our collective interests to pressure the Iranian regime economically.

"So I spend a fair amount of time trying to convince our counterparts that they need to convince the private sector folks that it is in their interests and for the sake of peace that there be a common effort to convince the Iranians to change their ways, and that there's a better way forward."

This is not to mock Bush but simply to note the dovetailing of long-standing foreign policy practices.

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Russia: Note to Presidential Candidates

This week's U.S. reversal on Iranian nuclear aims is a wake-up call on multiple fronts for those who will run American foreign policy for the next few years.

Among them is this: Vladimir Putin isn't a simple gadfly. Instead, he's one of the most important leaders the U.S. can cultivate over the next few years. Why? Because he's engaging and challenging the U.S. on issues that both countries care about, and happens to get it right -- and the U.S. wrong -- at important times.

As we learned this week, Iran is one. For years the U.S. tried to stampede him into supporting ever-escalating sanctions, leading to possible war, against Iran. But he resisted, asserting that President Bush's claims about Iran's nuclear weapons capability were overblown, and according to the new U.S. intelligence estimate it is Putin's judgment that was correct.

The new Iran intelligence highlights another needed correction: Putin in fact isn't inaccurate -- nor belligerent -- when he asserts that the U.S. presumes to know the only way on foreign policy.

U.S. policy on Russia currently amounts to this: You hurt my feelings.

It would be better to focus on issues, and the main one is energy, the foundation of Russian -- and Putin's -- power, how he's asserting Moscow's prerogatives in Europe and elsewhere.

As readers of this blog know, I think that one of the most potent instruments of power in Europe today is control of the flow of oil and natural gas. Putin has learned the lesson of the momentous U.S. foreign policy triumph last year with the completion of the Baku-Ceyhan oil pipeline and is conducting his own, much more ambitious pipeline policy.

Putin's strategy is market-oriented -- to cement and increase Russia's current control of 30% of Europe's natural gas market. It so happens, in my opinion, that that aim is incompatible with European and U.S. interests in a more diversified natural gas supply so that no one can dictate terms.

The U.S. is attempting to counter the Russian pipeline thrust, but is late to the game. U.S. energy bureaucrats led by Steven Mann are meeting in Sofia tomorrow and Friday to talk over how the U.S. can polish its strategy, and it'll be interesting to know the outcome.

I personally think that the new intelligence assessment on Iran -- like the previous one -- sounds too smugly certain. Anyone who has read Tim Weiner's excellent Legacy of Ashes can see that the intelligence business is barely manageable at best, like herding cats as the saying goes. But the fact that the intelligence services did not have rock-hard evidence before on Iran's intentions gives little comfort to those reading this week's abrupt, contrary assertions.

And it's equally discomfiting to those who have watched American policy on Russia amount to finger-pointing.

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Stalking the Caspian Horse

Back in July, a New Zealand page called Horsetalk ran out an interesting story on a British woman named Pat Bowles and her personal efforts to save and spread a breed of horse re-discovered in the 1960s in Iran and dubbed the Caspian. I missed the piece, and thanks to a horse specialty web page called Simply Marvelous for reprinting it this week.

As the story goes, an American woman named Louise Firouz who had married into Iranian aristocracy found this lilliputian-size horse -- average height about 11.2 hands -- trotting around a place called Amol, about 13 miles south of the Caspian Sea. It turned out that it was a long-lost breed that in past times was used to pull chariots. The locals were using them as work horses.

Firouz set out to save them -- she reckoned there were around fifty at the time -- and now there are well over a thousand around the world. One of the main U.S. breeding centers, the Kristull Caspian Ranch, run by Francie and Chuck Stull in Brenham, Texas, sold its last Caspians (except for two family pets) in September, and the couple retired. But there are other ranches selling them in the U.S., Britain, and elsewhere.

Pat Bowles, the woman profiled in the New Zealand story, is another of the horse's saviors, based in England.

Putin's Churchillian Aspirations

Ninety-dollar-a-barrel oil is wonderful for one's self esteem, as well as for stimulating the deference of one's acquaintances. But can it earn genuine respect?

That is Vladimir Putin's challenge. His best chance of securing that much-craved legitimacy is to pull off a diplomatic miracle. One such as resolving the Iranian crisis.

His high-minded actions and statements with his Caspian Sea neighbors in Tehran this week imply that Putin recognizes this. But can he do it?

One piece of intriguing news involves Putin's meeting with Iran's Supreme Leader, Ali Khamenei. According to Iranian nuclear negotiator Ali Larijani, Putin gave Khamenei a "message" of which the nuclear issue was a component, and that "we are now examining it."

Yesterday, President Mahmoud Ahmadinejad undercut Larijani by saying that Putin had not even mentioned the word "nuclear."

Still, let's take Larijani at his word. One enormous factor calling for optimism is that the two parties involved -- Russia and Iran -- would love to resolve the nuclear issue in a way that raises their own diplomatic credentials while diminishing the West's.

It's not known what Putin's message was. But we can imagine. For instance, on the difficult issue of electricity-production, he might have suggested a Russian agreement, for example, to build, supply and manage a self-contained nuclear power facility for Iran. In order to make Iran feel both safe and part of a bigger club, Putin might have suggested a comprehensive mutual defense accord building on the declaration that the Caspian republics made Tuesday. Putin definitely would have included a face-saving measure that allowed Iran to climb down on the nuclear issue without appearing to have done so.

Any agreement that gets Iran to renounce nuclear weapons-making ambitions would catapult Putin, and Russia, into a different and higher global sphere, while improving Iran's image as well.

Putin would not be spending so much diplomatic time and effort simply being a spoiler. He would receive -- and deserve -- genuine deference.

Putin's Show: An Opening on the Caspian

Yesterday's Caspian Sea summit in Tehran was decidedly the Vladimir Putin show, but the ostensible common front oddly enough seems to have revealed an opening for a spoiler. The West ought to climb through.

The main news of course was the states' rejection of being used as a staging ground to attack Iran. That's a very real issue, as the word has been on the street for almost a year that U.S. offensive plans against Iran included possible land attacks from both Azerbaijan and Afghanistan. If true, it would be downright unneighborly not to go along with Putin's proposed declaration against such an attack; Azerbaijan's Ilham Aliyev specifically couldn't disrupt the bonhomie and say, "Sorry, fellas, but we have to punch Mahmoud's lights out."

Yet, given Russia's similar peacenik act in Serbia in 1999, Putin's reach for the moral high ground this time wasn't all that surprising.

The more interesting topic I think regarded the issue of controlling activities on the Caspian. In the guise of environmentalism, Russia has long urged that all five Caspian states be vested with a veto against any work on the sea by any of its neighbors.

The actual reason for Moscow's supposed concern for sturgeon and seals is control of the region's oil and natural gas -- as long as no pipeline is built across the sea, Kazakhstan and Turkmenistan are effectively bottled up, and subject to a Russian stranglehold on energy exports.

Tehran was no different. Putin told the other presidents, "Projects that may inflict serious environmental damage to the region cannot be implemented without prior discussion by all five Caspian nations." Read AP account.

Yet, according to the AP account, his fellow former Soviet leaders were noticeably non-commital on the topic. Kazakhstan's Nursultan Nazarbayev, for example, said only that "pipeline routes need to be coordinated with nations whose territory they cross." That logic would not preclude building a cross-sea line, say, from Turkmenistan to Azerbaijan, as long as both agreed.

Russia, of course, expresses no such ecological concern when it regards Nord-Stream, its natural gas pipeline project across the Baltic Sea.

This is a hunch, but it could be that Kazakhstan and Turkmenistan are a bit fed up with, and not a little suspicious over, Putin's turns of glad-handing and subtle pressure to consign their energy future -- and independence -- to Russia.

As it stands, the eastern Caspian states are effectively in Russia's pocket because of the absence of trans-Caspian pipelines west to export their oil and especially natural gas free of Moscow's interference.

It's long been in their interest to commit to construction of that route. And it's in the West's interest -- particularly Europe's -- to make it happen once that commitment is made.

A Caspian Deal: Tea Anyone?

There has been fanfare leading into Tuesday's meeting of the leaders of the Caspian nations, and their discussion again of the vexing question of whether they are neighbors of a sea or a lake. Let's hope the tea and meals are tasty in Tehran, because there will be no breakthrough.

The main reason: None of the main antagonists are going to capitulate.

Lots of people rightly find humor in the sea-or-lake issue, which ostensibly determines how a body of water is treated in terms of the littoral nations' rights. Apart from its amusement value, however, it's pointless to debate on the merits of the various sides, because each produces its chosen group of long-ago treaties, laws and precedents to make points that are instantly dismissed by the other interested parties.

Instead, it's easiest to look at interests:

Iran and Russia generally fall into the same camp, but for different reasons (Iran wants title to more sea than it would deserve by a purely quantitative count of its coastline; Russia would like to control all activities on the sea, but will settle for halting any cross-sea pipeline that would further weaken its stranglehold on oil and natural gas exports from the region).

It's principally the idea of that trans-Caspian pipeline that will scuttle any deal. Azerbaijan in my opinion will never agree to a prohibition on a pipeline in the sea, and Kazakhstan and Turkmenistan won't either if they are smart. Yet Russia won't agree to any pact that doesn't preclude a pipeline.

So the meeting is hopeless in terms of a certain settlement -- Azerbaijan, Kazakhstan, Turkmenistan and Russia will continue to develop their oilfields at will. Washington will persist in trying to get Turkmenistan and Kazakhstan to build a cross-sea pipeline. And Russia will push the states not to build one.

On the other hand, the weather will be lovely (84 degrees fahrenheit; 29 celsius).