Plans to build a second artery are bogged down in bitter wrangling

Plans to build a second artery are bogged down in bitter wrangling. Instead of investing $500m in Tengiz this year as planned, it will spend $50m.What makes the oil Great Game difficult to play is that Russia is fragmented into competing fiefdoms, semi-privatised oil firms, ministries with varying interests and other power- brokers. Even President Yeltsin’s chief bodyguard, Alexander Korzhakov, gives advice on energy policy.And Russia is using its stranglehold over natural gas and petroleum pipelines to increase its influence.The Russian gas monopoly, Gazprom, has muscled into Kazakhstan’s Karachaganak gas field, obliging British Gas and Agip to give it a 15-per-cent stake. In Azerbaijan, the partly privatised Russian firm, Lukoil, gained a 10- per-cent stake in a $7.4 bn project involving British Petroleum. Azerbaijan’s former president, Abulfaz Elchibey, tried to resist any such role for Russia A military putsch forced Baku to reconsider. Mr Elchibey was removed from office, days before he was due in London to finalise a share-out of 4.4 billion barrels of off-shore oil that would have excluded Russia.Russia now wants to entrench such gains in international law It wants the Caspian Sea re- classified as a lake. This would deprive Kazakhstan and Azerbaijan of the exclusive rights they now claim over their own coastal waters, and place all Caspian decision-making under a joint “condominium”.Tengiz lies inland from the Caspian, and Chevron has avoided yielding a stake in its joint venture to Russian interests.

But the American corporation is being pressed to foot most of the bill for a new pipeline planned from the Caspian shore to the Black Sea by a consortium comprising Russia, Kazakhstan and Oman. Chevron, while desperate for an alternative route for its oil, has rejected demands that it cough up most of the money in return for a quarter stake in the $1.2bn pipeline project.Representing Oman, which was expected to provide much of the financing, is John Deuss, an elusive Dutch fortune-hunter typical of the murky world of money and oil in post-Soviet central Asia. He came to prominence in connection with allegations of sanctions-busting on behalf of South Africa. Another endeavour was a failed attempt to corner the market for North Sea Brent crude.A senior Kazakh official, frustrated by haggling over the new pipeline and by Oman’s fancy footwork, describes Mr Deuss as “odious”. Mr Dupre says Chevron is also “chomping at the bit” but is more diplomatic about the Bermuda-based Dutchman: “He’s a businessman trying to make a buck.”Turkey is lobbying for a pipeline that would skirt Russian territory and carry oil from the Caspian to the Mediterranean through Turkey. Such a route would dramatically alter petroleum – and power-politics in the region Russia, which stands to lose its stranglehold, is not keen. The US supports the idea but has its worries; one of the proposed routes to Turkey passes through Iran..

FROM ELIZABETH NASH

in Madrid
Gibraltar is resisting British pressure, restated on Monday by Douglas Hurd, the Foreign Secretary, to tighten legislation on its financial services.The Minister of Government Services, Juan Carlos Perez, speaking yesterday for the Chief Minister, Joe Bossano, said: “The only issue raised by Mr Hurd with Mr Bossano was to request that legislation that we have already passed covering proceeds from drug-trafficking offences be extended to cover the proceeds of all crimes.”Gibraltar regards this – the criminalising of handling of all monies representing proceeds of any crime – as unreasonable. Mr Perez said the European Union does not make this demand of other recognised European offshore banking centres and to impose it upon Gibraltar “could discourage bone fide investors in Gibraltar”.”We think parliament in Gibraltar has the right to interpret EU law as it sees fit. We are not prepared to be pushed around by big brother,” he said.Gibraltar’s Council of Ministers meets today to decide its response to Britain’s latest request. Mr Bossano’s government has the support of the opposition Social Democratic party. Its leader, Peter Caruano, said yesterday that it was unacceptable for the existing legislation to be widened to include possible fiscal crimes. “By discouraging investment it could deal a fatal blow to Gibraltar as an offshore financial centre.”The government in Madrid, which still claims sovereignty over the British colony, is sceptical about Gibraltar’s efforts to build an independent economy on the basis of offshore banking.

“The economic structure of Gibraltar is a complete fake,” was one official view this week.Madrid has been exercised recently over what it says is evidence that Gibraltar is being used as a haven for laundering drug money, and complains that the Rock’s finance services sector does not meet British banking standards. But both Madrid and London agree that more evidence is needed.. FROM TIM McGIRK

in New Delhi
If there is any man in India that the Prime Minister, Narasimha Rao, would like to see captured or killed, it is an Afghan gunman named Mast Gul who is hiding in the mountains of Kashmir.Mr Gul crossed the Hindu Kush to help Kashmiri Muslims in their five- year long secessionist battle against the Indian security forces. The Indians claim Mr Gul is a hireling of Pakistan which also has designs on Kashmir.Mr Gul is the most hunted man in the Kashmir valley, and his capture might help Mr Rao fend off angry calls for his resignation over the latest Kashmir crisis: the destruction of a holy Muslim shrine in Chrar-e-Sharif during a firefight last week between the army and Muslim guerrillas led by Mr Gul.For two days running, parliament has lambasted Mr Rao for the Indian army’s failure to protect one of Kashmir’s most sacred shrines. Worse still, in the eyes of many Delhi politicians, was that Mr Gul shot his way out of the flames and escaped, even though Chrar-e-Sharif was sealed off by over 1,500 troops.Slightly injured, Mr Gul nevertheless was able to dispatch from his hideout somewhere in the countryside a taped message, saying: “It is the Indian army’s wishful thinking that they have killed me. I am alive by the grace of Allah and will continue to fight.”The authorities claim Mr Gul deliberately set off explosives to destroy the Chrar-e-Sharif mosque so rebels could blame the fire on the Indian security forces.

Whatever the truth, most Kashmiris do indeed accuse the army of destroying the shrine and more than 1,500 houses and shops surrounding it. A shoot-to-kill curfew, now in its sixth day, in the state capital Srinagar has failed to halt Kashmiri protesters from torching Hindu temples and government buildings in retaliation for the loss of their shrine.In parliament in Delhi, the opposition leaders, the right-wing Hindu Bharatiya Janata Party, backed down from their threatened no-confidence motion against the Prime Minister, but Mr Rao gave the impression of a man with his back to the wall. His control over his own party has slipped so far that Congress rebels are holding a rally in Delhi tomorrow demanding he resign as party leader.Mr Rao’s ministers tried to deflect criticism away from him with the dangerous tactic of threatening Pakistan. India accuses its neighbour of sending in “foreign mercenaries” such as Mr Gul to destabilise Kashmir. The Railway Minister, Jaffer Sharief, said: “India has the legitimate right to teach a lesson to Pakistan, if required even by waging a war.”In Pakistan, the Foreign Minister, Sardar Asef Ahmed Ali, answered India’s menaces in equally belligerent tones.