In the aftermath of the armed clash, former Soviet republics and rising petro-states Azerbaijan and Kazakhstan have been reassessing Washington's exclusionist policies as rising concerns about Russian domination of the European Union's oil and natural gas import markets cause them to reassess their own export options, with Iran receiving increased attention in both Baku and Astana. While the U.S. administration becomes increasingly concerned with what it regards as the rising Russian threat, Iran has been moving quietly to position itself as an alternative energy export corridor and is receiving an increasingly sympathetic hearing from its Caspian neighbors.

The prize is enormous: As of January, BP's 2008 World Energy Review lists the proven oil reserves of Caspian nations at 265.2 billion barrels, with Azerbaijan possessing 7 billion barrels; Iran 138.4 billion barrels; Kazakhstan 39.8 billion barrels; Russia 79.4 billion barrels; and Turkmenistan 0.6 billion barrels.

At the Oct. 10 opening in Tehran of Iran's two-day International Oil Refining Forum, Iranian Oil Minister Gholamhossein Nozari told attendees that Iran is the Caspian's safest and most extensive route for shipping Caspian energy from north to south; to that end, Iran has been upgrading its Caspian port facilities at Neka in anticipation of increased oil swaps. Contrasting the costs of swaps vs. alternatives such as the Baku-Tbilisi-Ceyhan and Caspian Pipeline Consortium pipelines, for which Russia, Georgia and Turkey collect transit fees from Azerbaijan and Kazakhstan, Iranian Foreign Minister Manouchehr Mottaki noted that delivering a barrel of oil through Neka would cost only $2 to $3.

In a direct reference to the region's new geopolitical realities, Mottaki said, "Iran is ready to cooperate with foreign companies and states to ensure its oil supplies against the turmoil in the Caucasus," adding, "Iran can transfer Caspian Sea oil to the Persian Gulf and free international waters via the shortest and best possible route."

Warming to his theme of the vulnerabilities of Western export routes to potential conflict, the foreign minister offered a new project in direct competition with Western pipeline proposals. While Mottaki stated that Iran supports constructing a large oil pipeline to transport Caspian countries' oil through Iran to the Persian Gulf, commenting that the Caspian Sea-Persian Gulf pipeline would be both advantageous and safe, he offered no specifics, such as the proposed pipeline's capacity, its cost or the time needed for construction.

The Iranian pitch for transport business was accompanied by a direct appeal for foreign investment in Iran's oil refining capacity. In an oblique acknowledgment that the 1996 U.S. Iran-Libya Sanctions Act for years has largely stymied Iran's quest for significant foreign investment, Nozari commented that Iran's oil refining industry now needs more than $20 billion in investment, adding that Iran was willing to "shake the hands which are able and would like to assist us." Should such investment be secured, Iran intends to double its current refining capacity of 1.75 million barrels per day. In an unsubtle swipe at Washington, Mottaki added, "The bullying powers are trying to deprive world countries of the numerous blessings of participation in (Iran's) oil and gas projects to maintain their monopoly over the (global) energy industry."

Iran is also moving to improve its relations with Russia, as Tehran's new ambassador to Russia, Mahmoud-Reza Sajjadi, last week began his diplomatic mission in Moscow. Sharing a common goal with the Kremlin, weakening U.S. influence in Central Asia while promoting Iran as an alternative energy export corridor, on Oct. 15 Mottaki began a Central Asian tour to Turkmenistan and Kazakhstan.

Confrontation with the United States is never far from the Iranian government's considerations, however: The day after Nozari promoted Iran's transport infrastructure to his Caspian colleagues, Mottaki told a visiting delegation of French lawmakers, "Today, U.S. hegemony in the region is collapsing ... because it has failed to respond to the public opinion about its policies and it lacks reason. The truth is that today a new power is emerging which is the power of proposing new and logical ideas." French lawmaker Jean-Louis Bianco, who heads the delegation, commented in turn that Iran is playing a key role in the region and the world.

With talk of a possible U.S.-Israeli military strike against Iran's nuclear facilities increasingly speculated upon in the Western press, Iran nevertheless has scored a diplomatic success, as on Oct. 12, when Azerbaijan's ambassador to Iran, Abbas Ali Hassanov, during a news conference in Tehran was asked about a U.S. request to use Azeri territory to attack Iran, reiterated his government's previous opposition to such a request and replied, "Two years ago, when President Ilham Aliyev traveled to the U.S., Bush asked him to allow Washington to use Azerbaijan's territory to attack Iran, but Aliyev told him explicitly that Iran is a friend, neighbor and brother of Azerbaijan and that we don't allow our land be used against Iran," before adding that Azerbaijan supports Iran's Caucasus policy to resolve the Georgian conflict.

While Iran has yet to secure any firm fiscal or energy commitments from its former Soviet Caspian neighbors, Hassanov's comments clearly indicate that, should Washington decide to proceed with a military confrontation with Iran, its option to use Azerbaijan to open a "northern front" in its campaign will fail, much as did its similar requests to Turkey for a northern bridgehead in the run-up prior to the March 2003 opening of Operation Enduring Freedom in Iraq.

At the end of the day, Washington's unstinting support for Georgia in its military confrontation with Russia seems to have caused the Caspian owners of those 265.2 billion barrels of oil further to reconsider their export options, leaving up in the air for the moment the question of which they fear more -- U.S. sanctions or Iran's mullahs. What seems increasingly clear is that the Caspian nations prefer a diplomatic solution to regional problems over a military one. Whether Washington is listening is another question.

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