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AHI Noon Forum Features Stanley Kober Discussion On "Misguided Support For The Baku-Ceyhan Pipeline"
FOR IMMEDIATE RELEASE CONTACT: CHRYSOULA ECONOMOPOULOS
October 3 , 2001 No. 47/01 (202) 785-8430

AHI Noon Forum Features Stanley Kober Discussion On "Misguided Support For The Baku-Ceyhan Pipeline"

On September 26, 2001, the American Hellenic Institute's (AHI) noon forum series featured Dr. Stanley Kober, research fellow in foreign policy studies at the Cato Institute. Dr. Kober's presentation, titled "Misguided Support for the Baku-Ceyhan Pipeline," analyzed the economic and political viability and drawbacks to U.S. support of the proposed pipeline project from Baku, Azerbaijan to the Turkish port of Ceyhan.

On an economic level, the Baku-Ceyhan pipeline is not a viable project for critical factors based on the price of oil and the cost of the pipeline. Dr. Kober stated that development of technology drives down the price of any commodity product, including petroleum. As energy technologies continue to develop, it is projected that reliance on alternative energy sources will increase and worldwide demand for oil will decrease, thus forcing down the price of oil.

Furthermore, in order for the pipeline project to remain viable, Dr. Kober estimated that the price of oil must remain at $18 a barrel based on an overall pipeline project cost of $2.4 billion. However, recent estimates for the pipeline project's overall cost have risen to $2.8-$3 billion, and continue to rise. With a decreased demand and cost for oil as well as a rising overall cost in the construction of the Baku-Ceyhan pipeline, the project faces very serious economic challenges.

Also problematic is the issue of accountability in the Baku-Ceyhan pipeline equation. Regarding American support for the pipeline, "[The U.S. is] saying, 'you do this, you spend this money, but we're not going to be accountable for the risk, we're not going to cover you. We're not going to guarantee this if the investment does not pay off.'" Although the Turkish government has said it would guarantee the cost over the $2.4 billion, Dr. Kober stated, "This economy is in really bad shape. They're really in no position to be issuing guarantees." If the U.S. offloads accountability onto a Turkey in the midst of an economic crisis, the guest speaker posed a critical question: "Who will end up holding the bag?"

On a political level, the rapidly changing international environment resulting from recent terrorist strikes against the U.S. may have the overall effect of realigning alliances. Citing an article in the Turkish Daily News, Dr. Kober pointed out that, "cooperation between the former foes (U.S. and Russia) could jeopardize the ambitious Baku-Tbilisi-Ceyhan pipeline. The Russians may convince Washington to do away with or altogether scrap" the proposed project. "It is uncertain at this stage what the Russians will request from the Americans in return for their help against Islamic terrorists."

For the Russians, the Baku-Ceyhan pipeline is seen as competing with the Caspian Pipeline Consortium's (CPC) project, which runs from Kazakhstan's Tengiz field to the Russian port of Novorossiisk on the Black Sea.. While the Baku-Ceyhan pipeline still remains in the planning stages, the CPC has already completed construction of its 1,580-kilometer stretch.

Based on these and other key economic and political challenges, Kober concluded that the pipeline, far from promoting U.S. interests in the [Central Asian] region, undermines them.

Apart from his work at the Cato Institute, Dr. Stanley Kober's articles have appeared in a number of prominent publications, including The New York Times,The Washington PostThe Wall Street Journal, and Foreign Policy. Dr. Kober was also a frequent lecturer for what was formerly the United States Information Agency (now the Bureau for Educational and Cultural Affairs at the U.S. Department of State). Before joining the Cato Institute, he worked on defense issues for several other public policy research organizations, including the Hudson Institute and the Center for Naval Analyses. Dr. Kober holds a Ph.D. from the Fletcher School of Law and Diplomacy at Tufts University.

Dr. Kober's presentation at AHI's Noon Forum was based on an October 31, 2000 Cato Foreign Policy Briefing titled, "The Great Game, Round 2: Washington's Misguided Support for the Baku-Ceyhan Oil Pipeline." This publication is available on the Cato Institute's Web site athttp://www.cato.org/pubs/fpbriefs/fpb-063es.html.

For additional information, please contact Chrysoula Economopoulos at (202) 785-8430 or [email protected], and visit our Web site athttp://www.ahiworld.org.