When it comes to energy policy, is the United States worse than Turkmenistan? How about Russia, where a contract is a contract only when President-elect Vladimir Putin so decides? Is it less congenial than Brazil, where according to Reuters, Chevron executives seem likely to face criminal charges over a leak of 2,400 barrels of oil, 0.1 percent the size of BP's 2010 Gulf of Mexico spill?
In a speech Friday, ExxonMobil CEO Rex Tillerson (pictured above left, with Putin) said the U.S. compares unfavorably from an energy policy standpoint not just to those countries, but also to China, Argentina and Kazakhstan. The backdrop is a humongous, high-stakes boom in U.S. oil and gas drilling, and a superlative election-year battle between the U.S. industry and the Obama Administration. Both sides think the bonanza will much improve the U.S. economy and its balance of payments, but after that their respective fact sheets barely coincide.
I won't parse the whole flurry of industry and Administration statements. But Tillerson's speech -- delivered at the IHS CERA annual oil conference in Houston -- caught my eye both because he runs the industry's most successful company, and for his atypical rhetorical flourishes. You can watch yourself.
Yuri Kadobnov AFP/Getty Images
They love me, they love me not: Sometimes the best way to gauge danger in unfamiliar territory is to study the eyes of your guide -- if that person has a deer-in-the-headlights look, or gallops away screaming in the night, it generally means something is amiss. In concrete terms, when should we understand that a petro-ruler we are observing -- even one saying, "What, me worry?" -- is actually in serious political peril? For that answer, let's measure the political waters of Kazakhstan.
Trouble there began last weekend, when police shot and killed at least 14 striking oil workers in the western city of Zhanaozen. Locals said the police action was unprovoked, but President Nursultan Nazarbayev sided with his forces, dismissing the violence as the fault of "hooligans." Meanwhile, he shut off the Internet and phones, and blocked all the roads in and out of the trouble spot. Then, an amateur video surfaced showing that police had in fact shot strikers in the back as they were running away. In short order, Nazarbayev flew out to Zhanaozen, fired the regional governor and several senior executives of the state oil company, known as KMG, whose local subsidiary was a target of the strikes. Nazarbayev also said he was firing his powerful billionaire son-in-law, Timur Kulibayev, as head of Samruk-Kazyna, the national wealth fund that controls KMG. Watching action and reaction, I saw the proverbial galloping guide -- it is a far cry from "[they are] a group of hooligans," to offing the head of your probable chosen successor. Nazarbayev is worried. But why? Parliamentary elections are scheduled Jan. 15, and if that viral video tars his personal narrative as Kazakhstan's guarantor of stability, what does Nazarbayev have left?
Still, let's retain our equilibrium. It is notable that this is not the first time that Nazarbayev has fired Kulibayev. Since the 1990s, the sphinx-like playboy son-in-law has steadily risen as a young banking executive, to a variety of positions in private and state oil companies, a progression interrupted throughout by dismissal from his posts. Given that history, one is led to consider what posts are more senior than head of Samruk-Kazyna, which controls two-thirds of Kazakhstan's economy. Have you selected a more senior spot? Should Nazarbayev weather the storm, look for Kulibayev to appear there within about 18 months.
Go to the Jump for more on Kazakhstan, and the rest of the Wrap.
Mark Ralston AFP/Getty Images
Kazakhstan is moving fast to pacify its restive west as a new video circulates in which police shoot and beat retreating oil workers protesting labor conditions. Two reasons: With parliamentary elections three weeks away, President Nursultan Nazarbayev (pictured above) wants to stamp out any political narrative conflicting with his long-time assertion of keeping Kazakhstan stable. Abroad, the jittery global oil market is already starting to factor in a possible disruption of Kazakhstan's 1.5 million barrels a day of oil exports, half of which is an extremely high-quality light variety.
The Kazakhstan unrest -- violence in the western city of Zhanaozen in which some 14 workers were killed -- caps an extraordinarily turbulent year in the world's oil patch. The distribution of power has been shaken up in the Magreb countries of Egypt, Libya and Tunisia, and violence continues to threaten the rulers of Syria and Yemen. Saudi Arabia is spending some $130 billion to stave off its own public dissatisfaction. In Russia, Prime Minister Vladimir Putin's seemingly unassailable hold on power has been challenged by a botched decision to return to the Kremlin, and a rigged parliamentary election. All in all, the uprisings have helped to push annual average oil prices to their highest level in history, exceeding $100 a barrel.
The trouble on the eastern Caspian Sea is the climax of a six-month-long labor strike by some 1,500 oil workers over wages and other grievances. These workers appear to have mounted their strike against two oil companies -- the state oil company, which goes by the acronym KMG, and a Chinese-Kazakh oil company called Karazhanbasmunai (here is a good explanation by Alisher Khamidov at eurasianet.org.). Last weekend, as the country prepared to celebrate the 20th anniversary of its independence, workers protested city plans to turn their strike camp -- the Zhanaozen public square -- into a festive place for dancing and public dining. It turned into a riot, with vehicles and buildings set aflame.
At the 20-year mark of the Soviet Union's collapse, protests have broken out now in two of its oil-soaked constituent states -- Russia and neighboring Kazakhstan. In the latter, at least 15 oil workers and others died over the weekend. There is debate whether we are witnessing a spread of the Arab Spring, but I do not know why -- clearly we are.
The key matter is context -- Russians and Kazakhs are in the street of their own accord, but against the backdrop of wholly unpredicted upheaval in some of the world's most compleat police states. Former Russian Prime Minister Mikhail Kasyanov probably exaggerates when he tells London's Sunday Telegraph that he could beat Prime Minister Vladimir Putin in a second-round of presidential voting next year, but his general point is accurate: No longer can it be said with certainty that Putin can defeat any opponent in a fair fight. Whether consciously or sub-consciously, others including the Russians have absorbed courage and inspiration from the Arab Street.
Those are pure politics. Kazakhstan is a different story -- there we see the Arab Spring not most interestingly in the people in the street, but in the government's reaction to them. The image is of a Kazakh officialdom palpably terrified of the post-Muhammad Al Bouazizi world, in which no petrocrat seems safe (pictured above, a Tunisian memorial raised to Bouazizi's legacy two days ago).
Fethi Belaid AFP/Getty Images
Russian election clues? A couple of weeks ago, I ventured a bet that, contrary to the conventional wisdom, Russian President Dmitry Medvedev will run and win re-election in next year's elections; his mentor, Prime Minister Vladimir Putin, will opt to keep his protégé in place, I wrote. While for a variety of reasons I still think that is the case, it's understandable why many think otherwise: Putin is throwing up a lot of conflicting signals. Take his decision to eradicate much-hated and bribe-laden car inspections for the remainder of the year, worth up to $300, writes Will Englund at the Washington Post. And what about Putin's announcement of a $285 billion program to rebuild Russia's ramshackle roads, another bane of the country (that's Moscow traffic pictured above)? Is Putin announcing such programs from a simple sense of good governance? According to Robert Coalson of RFE-RL, the way Russia's strongman is presiding over the affairs of the ruling United Russia party, he is sending "the strongest signals yet that he intends to return to the presidency in 2012."
This is entertaining -- and convincing -- to be sure. But that's the point. Putin doesn't need to convince anyone -- all of Russia and the rest of the world know that the job of president is his for the taking. So why the show? Because he wants the accolades, the hero-worship, the pleading crowds and so on, but while pushing matters to the brink, in the end he will, for the good of the nation of course, step aside (technically, that is) and maintain the status quo. The system works the way it is. Ask yourself this question: why in the last month (as the Moscow Times rounds up in an editorial) have the killers of Stanislav Markelov been imprisoned; has imprisoned oligarch Mikhail Khodorkovsky, while not released, been permitted a fair hearing on state-run NTV television while announcing a decision to appeal; and has the alleged triggerman of murdered journalist Anna Politkovskaya been captured and charged? Is it because Medvedev is acting against Putin's wishes?
This is where it's possible to lose one's way. What seems dissonant in the tandem in fact isn't. It happens because Putin wants the balance that Medvedev provides. Not incidentally, Medvedev is content with this state of affairs as well. One way to understand Medvedev is as simply another expression of Putin -- that is, even if Putin stepped completely out of the picture, Medvedev would not turn Russia into bastion of liberalness. Rather, when Medvedev's Russia undoes some of the injustices in the country, "what might appear to be the dismantling of Putin's legacy is not a dismantling at all," the Moscow Times editorial board writes. It said:
Khodorkovsky, even if given parole for good behavior, will not be acquitted. Investigators might have found Politkovskaya's killer, but we are unlikely to ever know who ordered the murder. Ultra-nationalism is still not being fought outside the courtroom. And thousands of other murky cases -- such as the death of lawyer Sergei Magnitsky or the beating of Kommersant reporter Oleg Kashin -- have not been properly investigated. Most important, the power vertical, along with its creator, is as strong as ever. Medvedev may stay in the Kremlin without tackling these issues. But if a handful of high-profile cases is all that he has to offer in terms of political reforms, his second term in office will differ little from Putin's policy of status quo. A second Medvedev term might then be best described as 'modernized stagnation.'
Viktor Drachev AFP/Getty Images
During the Soviet period, Kazakhstan was a nuclear laboratory. As the United States did in Nevada, the Soviets carried out nuclear tests in the Kazakh city of Semipalatinsk and the neighboring town of Kurchatov. Over the last two decades, Kazakhstan has renounced its nuclear missiles, and in a celebrated 1994 mission called "Project Sapphire," shipped much of its enriched uranium to Oak Ridge, Tennessee. More recently, the United States has been flying drones over the test sites to surveil against terrorists or smugglers targeting still-remaining stores of plutonium or highly enriched uranium, according to a piece by the New York Times' Ellen Barry.
The disclosure about the U.S. surveillance is interesting. It's been clear for years that the states surrounding the Caspian Sea -- Azerbaijan, Kazakhstan and Turkmenistan -- are potential temptations for enterprising terrorists or criminal gangs.
Kazakhstan's old nuclear facilities and stores are among the inviting targets, though as discussed they have been the object of protective measures for many years. But what about the massive new oil facilities newly producing more than 1.5 million barrels of oil a day for BP, Chevron, ExxonMobil and others -- Azeri and Chirag in Azerbaijan, and Tengiz in Kazakhstan? The sea around Astrakhan -- a major port in southern Russia -- has more fields (pictured above).
These states have been free of terrorism. Part of that is their nature -- there is little radicalism in Central Asia and the southern Caucasus -- and there is a significant challenge, particularly in the case of Kazakhstan, crossing water or vast steppe. Yet there was an apparent suicide bombing in the important northern Kazakh oiltown of Aktobe last week (it is near the supergiant natural gas condensate field, Karachaganak), which while still under investigation means that no one can argue that an attack is wholly far-fetched.
(Update: A car bomb has killed two people outside the State Security Services office in the capital of Astana today [Tuesday]).
The potential outcome of violence in this region is probably under-appreciated. If any of those oil facilities were attacked, oil prices around the world would surge. This is because the Caspian has some of the only major new oil under production anywhere on the planet. Chevron so prizes Tengiz -- it alone provided 19 percent of the company's earnings last year -- that it has been flying Wall Street analysts out there all month.
Are drones protecting them, too?
While the petro-states of the Middle East are roiled by the Arab Spring, the Islamic countries of the former Soviet Union are mostly quiescent. The richest of them is Kazakhstan, which today is holding the latest in a two-decade string of rigged presidential elections. President Nursultan Nazarbayev, who will be swept into a new five-year term, isn't talking publicly, but his prime minister, Karim Masimov, has weighed in on how the Kazakhs view Cairo, Tunis, Damascus and so on. "What is the biggest difference between them and us? People in Kazakhstan, the young generation in Kazakhstan, have hope and they have an opportunity to go forward," Masimov told Reuters.
One can quibble with that observation -- it's not possible, for example, to follow one's aspirations freely in the oil industry, where the president's son-in-law, Timur Kulibayev, doesn't appreciate interlopers. Still, Masimov's is a fairly enlightened remark when one considers the lesson that some of the Arab states have learned from Cairo and Tunis, which is to shoot first and not negotiate. On the other side of the Caspian, for example, forces of Azerbaijan President Ilham Aliyev yesterday arrested some 200 protestors seeking his ouster, Eurasianet.org reports.
A limited number of U.S. diplomats in the region are leveraging the Arab Spring to drive home long-expressed U.S. agenda items on democracy. "The Arab Spring is a huge gift to anyone in his region who seeks democratic liberalization," one U.S. diplomat in the region told me. Other U.S. envoys disagree that anything is to be gained, and aren't alluding to the Spring in contacts with the autocrats of the countries in which they work. But I personally think the first envoy makes the most sense.
Kazakhstan is not the one-dimensional portrait that it depicts. In the New York Times, Ellen Barry reports that "there is no restless young elite that wants to take over the government," but perhaps she should interview the millionaire Bulat Abilov or the intellectual Oraz Jandosov. They and other members of the political, business and intellectual elite would like to see genuinely competitive politics, and broader political representation, and are proof that, unlike the popular narrative, there are obvious alternative examples of stable rule in Kazakhstan. One of the most common remarks about Kazakhstan is the crisis to come because there is no obvious successor to Nazarbayev, but I think that is wrong -- because Nazarbayev himself hasn't anointed one does not mean that there are not many, many legitimate successors out there. There will be a struggle when Nazarbayev goes, but I do not expect a dangerous crisis, and certainly not violence. Read on for more on this increasingly important petro-state
Lost among the high-profile shake-ups going on in the Middle East -- Egypt, Jordan, Tunisia, Lebanon, Yemen, Sudan -- is a little development 2,500 miles away in the petrostate of Kazakhstan. President Nursultan Nazarbayev yesterday discarded intricately laid plans for a 10-year extension of his rule. If enacted, the plans would "set the wrong guidelines for further generations of politicians," he said.
Nazarbayev is right, but what about his substitute for the extension -- a snap election in a few months that will add five years to his already two decades in office?
We've been discussing how far the ripples of the turmoil in Egypt might be felt. Until now, only Middle East dictatorships have appeared to be at risk. But it's early -- it took awhile in the late 1980s before the Gorbachev-era democracy wave took hold, and long-standing political and commercial walls fell from Latin America, to Asia, to Europe.
Over the weekend, Russell Zanca argued on this blog that the former Soviet Union in particular feels impervious. To that list one might add Iran (pictured above are, from left, Nazarbayev, Turkmenistan's Gurbanguly Berdimuhamedov and Iran's Mahmoud Ahmadinejad). When such uprisings have occurred in their midst in recent years, Russia and Iran have demonized their participants as stooges of Western-inspired "velvet revolutions." Imaginative U.S. diplomats assigned to these countries themselves have conjured up an inflated role in events.
The Middle East turmoil therefore ought to put the kabosh on such thinking: Assassinations and military coups can be organized from the outside, but successful popular uprisings arise from within.
Likewise, the uprisings are both vindication and repudiation for former President George W. Bush. They are vindication of what he said in 2003 -- that "as long as the Middle East remains a place where freedom does not flourish, it will remain a place of stagnation, resentment, and violence ready for export." They are a repudiation of what Bush did in response, which was to invade Iraq: Eight years later, the country remains a case study of the axiom that democracy cannot be imposed from the outside.
Current and former U.S. diplomats tell me that Egypt had little influence on Nazarbayev's decision to backtrack from his planned decade-long term extension. More likely, said one, is that Nazarbayev's motivation was to freeze out rivals with dreams of succeeding him, which the snap election resolves almost as well and perhaps better than the referendum idea. After all, like asking your boss for a 25 percent raise, 10 years can seem like overreach.
Yet even if Nazarbayev had been getting cold feet prior to Egypt, he could not be indifferent to the turmoil in the Middle East. Even if a popular rebellion appears highly unlikely at the moment, much can change: No dictator wants to spend a decade looking over his shoulder. Certainly this thought cannot be far from the minds of autocrats around the world.
Steve LeVine is the author of The Oil and the Glory and a longtime foreign correspondent.