CASPIAN CORRUPTION -- CHAPTER 7 FROM "CROSSING THE RUBICON"

by Michael C. Ruppert

Enron, the Binladin Group, al Qaeda, oil companies, Dick Cheney, and John Ashcroft

Special acknowledgement is due to Paul Thompson and the Center for Cooperative Research (<www.cooperativeresearch.org>). Building on work pioneered by From the Wilderness, this group of researchers has compiled a timeline going back 20 years that undermines the credibility of the US government's position on the events of September 11, 2001. In this chapter, indented paragraphs beginning with a bold-faced date are quoted from that timeline, listing their references. The resulting view of the history of big oil's involvement in the Caspian Basin and Central Asia reveals more than the major media and the government would like you to know.

1991: Future National security Advisor Rice joins Chevron's board of directors, and works with Chevron until being picked as Bush's national security advisor in 2001. Chevron even names an oil tanker after her. She is reportedly hired for her expertise in Central Asia, and much of her job time is spent arranging oil deals in the Central Asian region. Chevron also has massive investments there, which grow through the 1990s. [Salon, 11/19/01] Other research indicates that Rice's specialty was Kazakhstan. 1

1991-1997: The Soviet Union collapses in 1991, creating many new nations in Central Asia. Major US oil companies, including ExxonMobil, Texaco, Unocal, BP Amoco, Shell, and Enron, directly invest billions in these Central Asian nations, bribing heads of state to secure equity rights in the huge oil reserves in these regions. The oil companies commit to future direct investments in Kazakhstan of $35 billion. But these companies face the problem of having to pay exorbitant prices to Russia for the use of Russian pipelines to get the oil out. These oil [and gas] fields have an estimated [in the early years  of the decade] $6 trillion potential value. US companies own approximately 75 percent of the rights. [New Yorker, 7/9/01, Asia Times, 1/26/02]

November 1993: The Indian government gives approval for Enron's Dabhol power plant, located near Bombay on the west coast of India.  Enron has invested $3 billion, the largest single foreign investment in India's history. Enron owns 65 percent of Dabhol. This liquefied natural gas powered plant is supposed to provide one-fifth of India's energy needs by 1997 [Asia Times, 1/81/01, Indian Express, 2/27/00]

An initial Enron plan to secure natural gas from Qatar 2 fell apart in 1998, leaving Dabhol with only one hope, a gas pipeline across Afghanistan and Pakistan from Turkmenistan. 3 Earlier plans to secure natural gas supplies from Uzbekistan -- which would have also required a trans-Afghan pipeline -- were also failing as a result of Uzbekistan's concerns about the Taliban and failure to produce sufficient quantities of gas (see below).

October 21, 1995: Unocal signs a contract with Turkmenistan to export $8 billion worth of natural gas through a $3 billion pipeline which would go from Turkmenistan through Afghanistan to Pakistan.  Political considerations and pressures allow Unocal to win out over a  more experienced Argentine company [Bridas]. Henry Kissinger, a Unocal consultant, calls it "the triumph of hope over experience." 4  [Washington Post, 10/5/98]

[The Argentine company Bridas became uncompetitive after the implosion of the Argentine economy in December 2001. Was it coincidental?]

July 8, 1996: The US government agrees to give $400 million to help Enron and an Uzbek state company develop natural gas fields in the Central Asian nation of Uzbekistan. [Oil and Gas Journal, 7/8/96]

September 27, 1996: The Taliban conquer Kabul [AP, 8/19/02] and establish control over much of Afghanistan. Unocal is hopeful that the Taliban will stabilize Afghanistan, and allow their pipeline plans to go forward. In fact, "preliminary agreement [on the pipeline] was reached between [the Taliban and Unocal] long before the fall of  Kabul."

October 11, 1996: The Telegraph has an interesting article about pipeline politics in Afghanistan. Some quotations: "Behind the tribal clashes that have scarred Afghanistan lies one of the great prizes of the 21sr century, the fabulous energy reserves of Central Asia." "'The deposits are huge,' said a diplomat from the region, 'Kazakhstan alone may have more oil than Saudi Arabia, [Again, note that this is before any extensive drilling rook place]. Turkmenistan is already known to have the fifth-largest gas reserves in the world."' "Oil industry insiders say the dream of securing a pipeline across Afghanistan is the main reason why Pakistan, a close political ally of Americans, has been so supportive of the Taliban, and why America has quietly acquiesced in its conquest of Afghanistan." [Telegraph, 10/11/96]

By 2001 it was apparent that the results of drilling were lowering expectations. In December 2001 Business week reported that the Caspian basin "holds an estimated 110 billion barrels of oil. Indeed, the Caspian's reserves rival those of Iraq, whose deposits of 113 billion barrels rank second in the world only to OPEC leader Saudi Arabia's [proven] 262 billion barrels." 5 Contrast that with the statement of oil expert Colin Campbell when I interviewed him in October 2002 that "reserves are now quoted at 9-13 Gb [billion barrels]. BP-Statoil has pulled out.  Caspian production won't make any material difference to world supply. There is, however, a lot of gas in the vicinity." Indeed, the natural gas reserves in Turkmenistan have been proven to be as large as predicted. For this reason, the  natural gas pipeline from Turkmenistan to Pakistan will probably be the first -- and maybe the only -- trans-Afghanistan pipeline ever built. However, uncontrolled guerilla resistance may prevent even that from being successful.

Brzezinski's The Grand Chessboard was published in 1997, when US relations with the Taliban were falling apart and al Qaeda terror activity was increasing. As many sources have told me, some of the first dry holes were being reported in the Tengiz fields and around what was hoped would be the larger Kashagan field in mid to late 1997. Although the degree to which estimates of Caspian and Central  Asian reserves would have to be revised downward was not yet appreciated, every time the Caspian reserves got smaller, the importance of the reserves in Saudi Arabia and Iraq increased.

Officially, hope for a settlement with the Taliban that would have allowed  pipeline projects to proceed continued almost up until the moment the first plane hit the World Trade Center. Yet, by September 2001 the majors had accumulated data showing that the Caspian Basin held far less oil than was originally thought.  Had the geostrategic role of the Taliban thus been transformed from pipeline police into a much-needed enemy that would justify US military occupation in the region? The fact that the US had prepared invasion plans for Afghanistan while the talks continued to produce predictable and negative results suggests this.

It would be a mistake to believe that Brzezinski's book was motivated by a hope for reconciliation with the Taliban alone. In fact, a map he included in the book (see Chapter 6) indicating where the next conflict was likely to occur suggests otherwise.

US military deployments in 2001 and 2002 served the twofold purpose of blocking Russian moves into the region (protecting diversification of US supplies) and laying essential groundwork for the invasion and occupation of the Middle  East as the US effectively surrounded it under the pretext of combating terrorism.

The Taliban were watching with oil reserves

As the Caspian and Central Asian reserve estimates grew smaller with each new well, both the proximity and severity of Peak Oil increased. An urgent question is whether or not there was a correlation between decreasing reserve estimates from the Caspian and increased terror activity from al Qaeda. There is reason to suspect such a linkage. It was, after all, al Qaeda that satisfied Brzezinski's stated requirement of a "direct external threat" that would trigger the support of the American people for an "imperial mobilization." 

December 4, 1997: Representatives of the Taliban are invited guests to the Texas headquarters of Unocal to negotiate their support for the pipeline. Future President Bush Jr. is Governor of Texas at the time. The Taliban appear to agree to a $2 billion pipeline deal, but the Taliban will only do the deal if the US officially recognizes the Taliban  regime ... [BBC, 12/4/97; Telegraph, 12/14/97]

February 12, 1998: Unocal Vice President John J. Maresca --  later to become a special ambassador to Afghanistan --testifies before the House of Representatives that until a single, unified, friendly government is in place in Afghanistan the trans-Afghan pipeline needed to monetize the oil [and gas] will not be built ... [House International Relations Committee testimony, 2/12/98]

December 5, 1998: In the wake of the al-Qaeda bombings on the US embassies in Kenya and Tanzania, the US gives up on putting a pipeline through Afghanistan. Unocal announces they are withdrawing from the CentGas pipeline consortium, and are closing three of their four offices in Central Asia. Worries that Clinton will lose support among women voters for upholding the Taliban also plays a role in the cancellation. [New York Times, 12/5/98]

Late 1998: During the investigation of the 1998 embassy bombings, FBI counter-terrorism expert John O'Neill finds a memo by al-Qaeda leader Mohammed Atef on a computer. The memo shows that bin Laden's group has a keen interest in and detailed knowledge of negotiations between the Taliban and the US over an oil and gas pipeline through Afghanistan. Atef's own analysis suggests that the Taliban are not sincere in wanting a pipeline, but are dragging out pipeline negotiations to keep Western powers at bay. [Salon, 6/5/02]

The Atef memo, discovered by O'Neill (who later resigned over continued interference with his investigations, only to perish in the attacks of 9/11 as the World Trade Center's chief of security) is particularly important. French authors Jean-Charles Brisard and Guillaume Dasquie, in their 2002 book Forbidden Truth, described the seven-page memo:

Atef explains that the United States wants 'to take control of any region which has large quantities of oil reserves,' and 'the American  government is keen on laying the oil and gas pipelines from Turkmenistan through Afghanistan to Pakistan.' Atef concludes that al Qaeda's duty toward the movement [Taliban] is to stand behind it, support it materially and morally, especially because its regional and international enemies are working night and day to put an end to it and make it fail.

It seems clear the military chief didn't expect the pipeline negotiations to bear fruit. Referring to the Pakistani government as 'non-believers,' and noting that the pipeline 'will be under American control ... and it also goes through the territories of Pakistan which are allied to America,' Atef implies that the Taliban has no intention of ultimately cooperating with the project, but is trying to string along  the Americans and Pakistanis to win some breathing space for its unpopular government. 6

Who was stringing along whom? Oil industry sources who worked in the  region, interviewed for this book, stated emphatically that Russian intelligence sources knew that Caspian drilling was producing disappointing results almost in real time. Obviously the oil companies doing the drilling knew it. However, the consensus was that rather than look at the long-term implications vis-a-vis Peak Oil, the Russians opted instead to focus only on the fact that Russian oil had thus become more important, while American planners simply asked, Well, where do we go to get what we need?

July 4, 1999: With ... a pipeline deal with the Taliban looking increasingly unlikely, the US government finally issues an executive order prohibiting commercial transactions with the Taliban.  [Executive Order, 7/4/99]

May 2001: Vice President Cheney's national energy plan is publicly released. There are several interesting points, little noticed at the time. It suggests that the US cannot depend exclusively on traditional sources of supply to provide the growing amount of oil that it needs. It will also have to obtain substantial supplies from new sources, such as the Caspian states, Russia, and Africa. It also notes that the US cannot rely on market forces alone to gain access to these added  supplies, but will also require a significant effort on the part of government officials to overcome foreign resistance to the outward reach of American energy companies. [Emphasis added. Japan Today, 4/30/02]

May 23, 2001: Zalmay Khalilzad is appointed to a position on (he National Security Council as Special Assistant to the President and Senior Director for Gulf, Southwest Asia, and Other Regional Issues.  Khalilzad is a former official in the Reagan and Bush Sr. administrations. During the Clinton years, he worked for Unocal. [Independent;  1/10/02; State Department profile, 2001] [Note: Khalilzad is today the US proconsul in Afghanistan, but he also played a major US role  in the US strategy towards Iraq.] [6a]

Mid-July, 2001: John O'Neill, FBI counter-terrorism expert, privately discusses White House obstruction in his bin Laden  investigation. O'Neill says, "The main obstacles to investigate Islamic terrorism were US oil corporate interests and the role played by Saudi Arabia in it." He also states, "All the answers, everything needed to dismantle Osama bin Laden's organization, can be found in Saudi Arabia." He also believes the White House is obstructing his investigation of bin Laden because they are still keeping the idea of a pipeline deal with the Taliban open. [CNN, 1/8/02; CNN, 1/9/02;  Irish Times, 11/19/01; the book Bin Laden: The Forbidden Truth, released 11/11/01]

Posturing to control energy

If it was clear by this time -- especially in light of the 1998 Atef memo -- that al  Qaeda and the Taliban were never going to facilitate pipelines, why then would the US government have an interest in preventing the dismantling of al Qaeda and the destruction of Osama bin Laden? Only one explanation suffices: Bin Laden, al Qaeda, and the Taliban were being preserved -- for the time being -- to serve  another purpose.

August 2, 2001: Christina Rocca, the Director of Asian Affairs at the State Department, secretly meets the Taliban ambassador in Islamabad, apparently in a last ditch attempt to secure a pipeline deal.  Rocca was previously in charge of contacts with Islamic guerrilla groups at the CIA, and oversaw the delivery of Stinger missiles to Afghan Mujahedeen in the 1980s. [Irish Times; 11/19/01; Salon, 2/8/02; the book Bin Laden: The Forbidden Truth, released 11/11/01]

Sept. 11, 2001: The World Trade Center and Pentagon are attacked.

October 9, 2001: US Ambassador Wendy Chamberlain has a meeting with the Pakistani oil minister. She is briefed on the gas pipeline project from Turkmenistan, across Afghanistan, to Pakistan, which appears to be revived "in view of recent geopolitical developments." [Frontier Post, 10/10/01]

December 22, 2001: Prime Minister Hamid Karzai takes power in Afghanistan. It had been revealed a few weeks earlier that he had been a paid consultant for Unocal, as well as deputy foreign minister for the Taliban for a time. [LeMonde, 12/13/01; CNN, 11/22/01]

February 9, 2002: Pakistani President Musharraf and Afghan leader Hamid Karzai announce their agreement to "cooperate in all spheres of activity" including the proposed Central Asian pipeline, which they consider to be "in the interest of both countries." [Irish Times, 2/9/02]

February 14, 2002: The Israeli newspaper Ma'ariv astutely notes [in  a column by Uri Averny]: "If one looks at the map of the big American bases created [in the Afghan war], one is struck by the fact that they are completely identical to the route of the projected oil pipeline to the Indian Ocean." The same article also states, "Osama bin Laden did not comprehend that his actions serve American interests. If I were a believer in conspiracy theory, I would think that bin Laden is an American agent. Not being one I can only wonder at the coincidence." [Chicago Tribune, 3/18/02] 

May 30, 2002: Afghanistan's interim leader, Hamid Karzai, Turkmenistan's President Niyazov, and Pakistani President Musharraf meet in Islamabad and sign a memorandum of understanding on the trans-Afghanistan gas pipeline project. [Alexanders Gas and Oil  Connections, 6/8/02; Dawn, 5/31/02]

October 18, 2002: "The massive mothballed Dabhol power project that bankrupt US energy company Enron Corp. built in western India could be running within a year, with a long-standing dispute over power charges close to being renegotiated, a government official said." Dabhol is India's largest ever, foreign investment project.  Despite reorganizing from a bankruptcy, Enron still holds a controlling 65 percent stake in the Dabhol Power Co., while General Electric Co. and Bechtel Corp. hold 10 percent each. The Maharastra State Electricity Board holds the remaining 15 percent. [AP, 10/18/02]

Before leaving this section it is important to note that Enron's Dabhol power plant was deemed so important both to Enron and to US economic and political interests that the National Security Council actually convened a Dabhol working group in the summer of 2001. E-mails obtained by both the Washington Post and the New York Daily News confirmed that the NSC had prepared talking points for and briefed Vice President Cheney and President Bush on Enron's difficulties with the Indian government as it attempted to sell its interest in the power plant for $2.3 billion and get its hands on payments which the Indian government felt it was not obligated to pay. 7 The stories confirm that Cheney did speak to an Indian official on Enron's behalf, but indicate that a subsequently planned discussion by President Bush did not take place because Enron's financial collapse had become front-page news. 8

The fact that Enron is still alive and still retains control of the project appears to be a great deception -- especially insofar as Enron's stockholders and the American people are concerned.

The deal with Iraq

By the time the United States publicly turned its gaze on Iraq, it was clear that the Caspian Basin and Central Asian oil prospects had become a serious disappointment.  What were once touted as oil reserves possibly as big as Saudi Arabia's, then possibly as big as Iraq's lesser but still massive reserves, had become, according to the New York Times, insignificant in their potential for ameliorating the  coming crisis:

The State Department is exploring the potential for post Taliban energy projects in the region, which has more than 6 per cent of the world's proven oil reserves ... 9

Iraq had 11 percent of the world's oil reserves; many of the wells were already drilled, there was infrastructure (albeit shabby after 12 years of sanctions) in place, and there was less need to invest in new pipelines or to wait for them to be built over long distances. It is inconceivable that the NEPDG did not know that Caspian reserves were inconsequential, and that this had somehow not been discussed inside the Task Force.

What also makes Iraq so spectacularly different from Central Asia is the degree to which nations that had been key US allies in the early war against terror had strategically invested in Iraq; such investments simply didn't exist in Central Asia. The US made it clear that the Iraq investments of these countries  (especially France and Russia) might be forfeited in retaliation for their opposition to the war. In fact, during the most dramatic stages of US negotiations with the UN over the Iraqi invasion, the US, speaking through its puppet organization the Iraqi National Congress, made it clear that, absent full cooperation -- nations with vested interests in Iraq might lose out completely after the US took control. 10 That position has been reaffirmed and even strengthened several times since.

In retrospect, the revelations in 2003-2004 that George W. Bush was fixated on an Iraqi invasion while the WTC rubble was still smoldering are consistent with all of this. Revelations that the Project for a New American Century (PNAC), contributor of so many Bush administration officeholders, planned for an Iraqi occupation as far back as September of 2000 coincide with the Caspian basin  drilling results. The PNAC report mentioned Iraq in 24 places and stated:

Indeed, the United States has for decades sought to play a more permanent role in Gulf regional security. While the unresolved conflict with Iraq provides the immediate justification, the need for a substantial American force presence in the Gulf transcends the issue of the regime of Saddam Hussein. 11

Russia acted as a US partner in the post-9/11 world and derived some benefit from that role -- but only until Iraq took center stage. Russian companies had already been heavily partnered with Western interests in many early explorations and pipeline contracts running from the Caspian basin, such as the Caspian Pipeline Consortium's (CPC) Novorossiysk pipeline, which opened in November, 2001. 12 A larger project, known as the Silk Road Energy strategy, looked forward to the development of pipelines eastward, and Russia remained a key player in those projects. Russia benefited from post-9/11 US military operations in the region, that significantly weakened Islamic fundamentalist movements along its southern border, freeing it to address the oil and pipeline interests in Chechnya that were vital to ensuring the short-term stability of Russian exports -- a necessary ingredient for a Russian economic recovery.

Iraq was different. It was a strategic interest, one that could make or break any economy. It seems clear that the regional issues of Central Asian and Caspian participation were tactical concessions that allowed the US to gain the strategic  military position in the Middle East. In September 2002 the Washington Post reported that Russia, France, China, Italy, Spain, India, Algeria, the Netherlands, and Britain had massive investments all centered around the future development or refurbishing of Iraqi oilfields. 13 Russia, having already passed its peak of production and owed billions of dollars by the Iraqi government, had a special stake in seeing that agreements were honored and that the price of oil remained high. 14

The Elephant in the Living Room

In perhaps one of FTWs most incriminating post 9/11 stories, "The Elephant in the Living Room," I built on leads provided to me by a former high-ranking attorney in the Justice Department and an incredible piece of investigative reporting done by Seymour Hersh. 15 That story revealed that major bribes totaling as much as $1 billion had been paid by ExxonMobil and BP-AMOCO to Kazakh President  Nursultan Nazarbayev in order to secure equity rights in Kazakh oil fields during the 1990s. My own investigation revealed that, even as three separate US grand  juries were investigating the bribes, Attorney General John Ashcroft had accepted large campaign donations from both companies. In the case of ExxonMobil he had taken more money than he had from Enron.

This placed Ashcroft in a dilemma: although he had promptly recused himself from any participation in the Enron investigation, he had not recused himself from the grand juries. In fact, several inside sources told me that Ashcroft was, in  fact, interfering with grand juries. I also disclosed that when the bribes were given  and the equity rights transferred, Dick Cheney, then CEO of Halliburton, had also been a sitting member of the Kazakh state oil advisory board which had approved the sale on direction of Nazarbayev. 16 That made Cheney the principal target of a felonious bribery investigation. No wonder John Ashcroft needed to control the grand juries.

Both ExxonMobil and BP-Amoco were granted access to Dick Cheney's energy task force, a body that -- as of this writing -- is still illegally refusing to release  its records to the American people. It now seems likely that the Caspian drilling failures were a major item on the discussion agenda of those secret meetings, further adding to the sense of urgency building before September 11th.

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