Recently in Central Asia Category

Ever since the end of World War Two, the U.S. has come to regard Saudi Arabia as almost its exclusive oil producing enclave.

In February 1945, after the Yalta Conference with Soviet General Secretary Iosif Stalin and British Prime Minister Winston Churchill, on his way home U.S. President Franklin Delano Roosevelt and King Ibn Saud met aboard the New Orleans-class heavy cruiser U.S.S. Quincy in the Suez Canal's Great Bitter Lake. During the meeting, instigated by Roosevelt, he and Ibn Saud concluded a secret agreement in which the U.S. would provide Saudi Arabia military security, including military assistance, training and a military base at Dhahran in Saudi Arabia, in exchange for secure access to supplies of oil.

Sixty-seven years later, my, how things have changed, as China is now muscling into the Kingdom of the Two Holy Places.

On 15 January Visiting Chinese Premier Wen Jiabao and Saudi Arabian King Abdullah bin Abdul Aziz agreed to make concerted efforts to enhance bilateral relations.

The spectacle of OPEC's leading petro-state and East Asia's superpower economy making common cause has surely caused the burning of the midnight oil inside the Beltway.

While Wen said that China is willing to strengthen coordination with Saudi Arabia on all major issues by expanding cooperation in trade, investment, infrastructure, high-tech, finance, security and law enforcement, what must have surely caught the eye of Washington's mandarins was him adding that China intends to develop a cooperative partnership with Saudi Arabia in the energy sector.

And why not? Saudi Arabia is the largest supplier of oil to China and bilateral trade between the two countries soared to $58.5 billion in the period January-November 2011.

And the fruits of such bilateral proximity were on the table even before Wen made his fulsome remarks, as the state-owned Saudi Press Agency reported on 14 January that Saudi state oil giant Aramco has signed an agreement with state-owned giant China Petroleum and Chemical Corporation Ltd. (Sinopec) to build an oil refinery, named Yasref, in the Red Sea city of Yanbu, which will become operational in 2014, processing 400,000 barrels per day.

What is really going to catch Washington's and the foreign investment community's attention is how the agreement is structured - Saudi Aramco will hold a 62.5 percent stake with Sinopec holding the remainder.

In one of 2012's greatest understatements, Aramco president and CEO Khalid al-Falih said that the contract "represents a strategic partnership in the refining industry between one of the main energy producers in Saudi Arabia and one of the world's most important consumers."

Continuing his victory lap around the western shores of the Persian Gulf, Wen will also visit Qatar and the United Arab Emirates, two other stalwart U.S. allies.

And the eastern side of the Gulf?

Commenting on Iran, China's third largest source of oil imports, on 11 January Chinese Foreign Ministry spokesman Liu Weimin said at a press briefing that China will maintain its trade ties with Iran despite efforts by U.S. Treasury Secretary Timothy Geithner to convince Beijing to join a proposed embargo of Iranian oil exports.

But perhaps the most intriguing element of the Riyadh-Beijing lovefest was the announcement that on 15 January Saudi Arabia signed an agreement with China for cooperation in the development and use of atomic energy for peaceful purposes, an event of significant importance that both Abdullah and Wen attended.

No comment is really needed here, except to note that many of the questions asked about Iran's civilian nuclear power program, such as why does a leading petro-state need nuclear energy, are unlikely to be asked about this particular venture, underling that once again, reality in the Middle East is whatever your perceptions tell you in advance it is.

Source: http://oilprice.com/

By. John C.K. Daly of Oilprice.com

As we start a new year, consider the miserable plight of the average Pakistani electricity consumer.

With about 50 per cent less electricity generation capability than the actual demand, Pakistan's National Grid is facing more than a 5,000-megawatt shortfall in power generation, leading to blackouts in both urban and rural areas of the country. Due to unscheduled shortages by the National Power Control Center, urban areas are facing unscheduled minimum 8-hour power blackouts each day, while in rural areas the blackouts can last as long as 14 hours.

The situation is equally miserable in the country's compressed natural gas (CNG) sector, which is now facing three days per week suspension of gas deliveries, the country's textile sector -four days a week, while the gas supply to non-textile industry has been suspended for indefinite period.

Scrambling to exploit virtually any indigenous sources of energy, officials in the capital Islamabad are now pinning their hopes on the Thar Underground Coal Gasification (UCG) pilot project, situated in the Tharparkar desert in Sindh eastern Pakistan.

Underground coal gasification converts coal to gas while still in the coal seam, where injection wells are drilled and used to supply the oxidants to ignite and fuel the underground combustion process, with separate production wells used to bring the product gas to surface. The high pressure combustion is conducted at temperatures of 1,290-1,650 degrees Fahrenheit, but can reach up to 2,730 degrees Fahrenheit. The process produces carbon monoxide and dioxide, hydrogen and methane.

Boosters of the Thar UCG project note that Block Number 5 of Thar Coal Project contains 1.4 billion tons of low-grade lignite coal reserves. Overall the coal reserves at Thar are estimated at 175 billion tons of lignite coal.

Advantages claimed for the Thar UCG project include the fact that, as the coal is burnt 600 feet under the ground, threat of environmental pollution is minimized. In addition, as the coal is processed in situ rather than being dug out and brought to the earth's surface to be burnt to generate electricity, UCG will minimize electricity generating costs, projected to be $0.04538 to $0.05673 per kilowatt hour, as opposed to current costs at $0.11345 to $0.13614 per kilowatt hour.

And all that is required to make this energy miracle happen is for the federal government to provide an additional $100 million in funding to generate electricity from the project as soon as possible, which will then reportedly allow the Thar UCG project to supply 100 megawatts of electricity annually to the national power grid by December 2013. According to Dr. Muhammad Saleem, director of the Thar UCG project, only $9.1 million has been spent on the Thar's UCG development so far.

Science and Technology Planning Commission member Samar Mubarakmand said that Pakistan's coal reserves are sufficient to provide electricity to the nation for more than 30 years.

But the Thar UCG project has its critics. A number of professional chemical engineers and petrochemical experts, speaking on condition of anonymity, have collectively voiced their concerns, particularly about the non-technical specialist management of the project, noting,

"The huge energy and petrochemical potential of Thar is wholly dependent on the success of its pilot project and if the non-technical management of this plan does not remove the project's flaws, the country would ultimately be deprived of these huge underground assets forever. You can imagine what can happen if any pilot project fails solely due to a lack of knowledge and expertise ...
usually, every oil and gas company first does rigorous tests on oil and gas wells to determine the composition of the gas and oil and then build the multi-million dollar facility. This is the very first step but in the UCG project the team does not know anything about the composition of the gas and yet they want to build a facility. They are only spending lot of money...".

Visionary project for Pakistan's energy future or enterprise doomed to failure by inept crony management? Pakistani electricity customers will remain figuratively and literally in the dark until these questions are definitely answered.

Source: http://oilprice.com

By. John C.K. Daly of Oilprice.com

On 16 November in Astrakhan Lukoil president, Vagit Alekperov told journalists that his company will spend over $16 billion over the next decade to develop the country's Caspian offshore Korchagin and Filanovskii oil and natural gas fields in the Caspian, at the signing of a cooperation agreement with the Astrakhan Region.

An equitable division of the Caspian's offshore resources have bedeviled the region since the December 1991 implosion of the USSR, putting the Soviet Union's previous cozy arrangements with the Shah's Iran "into the dustbin of history," to quote Leon Trotsky.

Before the collapse of the USSR, the Soviet Union and Iran effectively divided the inland sea amongst themselves, according to the terms of the 1940 Soviet-Iranian treaty, which replaced the 1921 Treaty of Friendship between the two countries, which awarded each signatory an "exclusive right of fishing in its coastal waters up to a limit of 10 nautical miles." The treaty further declared that the "parties hold the Caspian to belong to Iran and to the Soviet Union."

Since 1991 three new nations have arisen in the Caspian basin to contest this bilateral arrangement - Azerbaijan, Turkmenistan and Kazakhstan. For the past two decades the five nations have wrangled about how to divide the Caspian offshore waters, and little has been achieved.

Amidst the disagreements Azerbaijan, Turkmenistan and Kazakhstan have tentatively moved cautiously to develop their offshore reserves in sectors that they believe would be indisputably within their future assignations under an eventual five-state agreement.

Even within these cautious offshore margins, Azerbaijan and Kazakhstan have increased their output in the last 15 years by 70 percent.

But at issue are the diametrically opposed positions of Iran and the Russian Federation about how to develop an international Caspian consensus beyond the now moribund 1921 and 1940 treaties. Iran insists that all Caspian nations should receive an equitable 20 percent of the Caspian, while the Russia Federation has consistently maintained that the five Caspian riverine nations should receive their portion based on the length of their coastline. Under the Russian formula, Iran's sector would consist of 12 percent to 14 percent of the Caspian's waters and seabed.

The stakes are high - in 2009 the U.S. government's Energy Information Administration estimated that the Caspian could contain as much as 250 billion barrels of recoverable oil along with an additional 200 billion barrels of potential reserves, in addition to up to 9.2 trillion cubic meters of recoverable natural gas.

Accordingly, all five Caspian nations have been delicately developing their offshore Caspian reserves in areas that will undoubtedly remain theirs whatever eventual agreement is hammered out between Azerbaijan, Iran, Kazakhstan, the Russian Federation and Turkmenistan. The Russian Federation and Iran are the last two nations to move "offshore."

Alekperov said, "Five hundred billion rubles ($16 billion) will be invested in development. This huge amount will provide an opportunity for sustainable development in the region."

Astrakhan Region Governor Aleksandr Zhilkin waxed lyrical on the importance of the agreement for the long-term development of Astrakhan's shipbuilding industry, situated on the lower Volga, the Russian Federation's major river emptying into the Caspian. Zhilkin commented, "All shipyards in Astrakhan Region will have work for the next ten years. Vagit Yusufovich (Alekperov) mentioned that Lukoil is investing more than 500 billion rubles ($16 billion) over the decade.

Zhilkin's remarks to reporters are hardly an idle boast, as he stated that Lukoil had paid more than $16.1 million in taxes last year to Astrakhan's regional budget.

So, the Russian Federation, like its four Caspian neighbors, is now beginning to tiptoe into its offshore waters, all the while insisting that its vision of divvying the inland sea prevails.

The last two decades have seen an apparent pragmatism slowly evolve over the Caspian offshore resources, first in Baku, followed by Astana, Ashgabat and more recently and reluctantly, Tehran and Moscow. While the issue of a final disposition of the Caspian's offshore waters remains significant if for no other reason than the various proposed undersea pipelines such as Turkmenistan-Baku, which could be an influential element in the European Union's projected $15 billion Nabucco natural gas pipeline reverie, all five nations seem to be moving cautiously towards planting their offshore flags in areas unlikely to arouse their neighbors.

It will be interesting to see if they meet in the middle.

Source: http://oilprice.com/

By. John C. K. Daly of http://oilprice.com

The past two decades since the 1991 collapse of Communism have seen the Russian Federation and the U.S. involved in an updated version of the 19th century's "Great Game' for mastery in Eurasia over the debris field of the former USSR.

Not surprisingly, Moscow regards its former colonial fiefdoms as part of its "near abroad," a "Monroeskii Doktrin" variant of U.S. interest in Central and Latin American, where a priori interests rule.

U.S. interests in the post-Soviet Eurasian space since 1991 have fixated first on the region's immense but underdeveloped energy resources, while the post-9/11 environment added a second dimension - military bases, handily useful for monitoring both the Russian bear and a rising China.

Washington's confrontation with Moscow over regional dominance is increasingly coming to resemble the memorable scene in "Raiders of the Lost Ark" (oddly enough, set in the same area), where Marion Ravenwood is involved in a boozy contest to drink her opponent under the table.

The last piece of gristle left on the gaming banquet table is Tajikistan, the poorest, then and now, of the former Soviet republics, but one in which now both the Russian Federation and the U.S. discern 'strategic" interests.

What is tragic in this game of shadow boxing is how little is 'trickling down" to the average Tajik, whose life is one of grinding poverty and diminished expectations. Tajikistan faces a daunting litany of problems - quite aside from the aforementioned poverty, the population's misery index includes substantial portions of drug trafficking, persistent Islamic militancy and corruption. The 2010 Global Corruption Barometer, a recent report by Transparency International, ranked Tajikistan one of the world's worst nation's in terms of corruption, placing it at 154th out of 178 surveyed.

As for drugs, Tajikistan's porous 810 mile-long border with Afghanistan is essentially wide open, a porous frontier which separates one of the world's most unstable countries from one of the poorest.

Washington has belatedly recognized Tajikistan's importance in its efforts to pacify Afghanistan. Last year the U.S. provided Tajikistan with a munificent $65.48 million in foreign aid. Washington's twin concerns for Tajikistan are the drug trade and Islamic militancy, and there is little indication that either is being successfully contained. The United Nations Development Program (UNDP) estimates than in 2010 Afghanistan produced about 3,600 tons of opium, much of which transits Tajikistan on its way to European and American markets. In 2009, Tajik security services seized a paltry 4.5 tons of drugs. Any bets as to how much else slipped through?

As for Russia, it never really left. Last week Sergei Naryshkin, head of the administration of Russian President Dmitrii Medvedev, accompanied by Russian Defense Minister Anatoli Serdyukov visited Tajikistan, and met with high-ranking Tajik officials. One immediate outcome of their discussions was Moscow's decision to reduce customs duties for oil products exported to Tajikistan, no small matter for Dushanbe, which imports approximately 90 percent of its hydrocarbons from Russia.

As for Tajikistan's Islamic militants, they are a legacy of the country's brutal civil war. Of all the former Soviet "stans," Tajikistan suffered the most following the 1991 collapse of the USSR, as in 1992 Tajikistan descended into a brutal civil war dominated by diehard Communists and Islamic militants. When it ended five years later with a UN-brokered agreement, more than 50,000 Tajiks had been killed in a nation of only 7.5 million, and more than one-tenth of the population had fled the country. In understanding the appeal of Islam among a people as downtrodden as the Tajiks, it is important to remember that Communism largely failed to improve their lives, while two decades of capitalism has enriched only a small portion of the country's elite, leaving Abduallah Sixpack worse off than before, with a vast array of grudges.

As for the current administration, it is pinning its hopes on becoming Central Asia's leading electricity exporter, seeking to complete the vast 3,600-megawatt Soviet-era Vakhsh River Rogun hydroelectric cascade, begun in 1976. Squeezing the population to support its glorius nationalist project, in December 2009 the Tajik government issued Rogun stock and made it compulsory for citizens to purchase nearly $700 worth of shares, a sum exceeding most Tajiks' annual income, in order to collect $600 million for construction to continue.

The project has aroused anxieties in neighboring Uzbekistan, which fears that Rogun would diminish downstream water flows of resources critically needed for Uzbekistan's massive cotton crops.

So, what to do?

It is time that Washington and Moscow realize their commonality of interests in Tajikistan, staunching the drug trade and diluting the appeal of radical Islam. Accordingly, aid should be centered on improving life in the countryside and reviving regional agriculture, however dull a subject it may be. Furthermore, both countries should agree that Tajikistan as a military asset is off the table and instead assist it in recovering from the heinous damage inflicted by its civil war, which left most of the country's Soviet-era infrastructure in ruins.

As long as the country remains a pawn in the new "Great Game," its population will listen to the alluring call of its Islamic heritage, and, as both Russia and the U.S. have discovered to their cost, that chorus includes a number of voices whose song is not necessarily supportive of either society. For Tajikistan, its time to get back to basics, which means, above all, providing the means for a man to support his family. The country's population is 7.5 million - how hard and expensive can it be, especially for a superpower blowing $120 billion a year in neighboring Afghanistan?

Source: http://oilprice.com/

By. John C.K. Daly of OilPrice.com

In the past three decades the Islamic Republic of Iran has developed a well-earned sense of paranoia. First, in September 1980 Saddam Hussein invaded Iran in what he thought would be a quick military victory, but which quickly turned into an eight-year bloody slugfest, leaving an estimated 500,000-1,000,000 dead before the guns fell silent.

More recently Iran has been subjected to increasingly militant rhetoric from both Tel Aviv and Washington over its civilian nuclear energy program, with thinly veiled threats of possible military action if Tehran does not abandon its efforts, even though they are completely complaint under the terms of the Nuclear Non-Proliferation Treaty (NPT), which Iran has signed.

Now however, potential is brewing for Iran from an unexpected direction - the north.

Russia is sharply increasing its military presence in the Caspian. Russian Federation Navy Commander in Chief Admiral Vladimir Vysotskii has stated that Russia's Caspian Sea Flotilla will receive up to 16 new ships over the next decade, while some aviation units will be transferred to the Navy from the Russian military's southern operational-strategic command. What has really got to have the mullahs in Tehran fingering their worry beads however is Vysotskii's promise to provide the Caspian Sea Flotilla with Bastion shore-based missile systems armed with Yakhont hypersonic missiles, which are designed to destroy surface targets at distances of up to 200 miles.

Russia's Caspian Sea Flotilla flagship, the Tatarstan frigate, is already the most powerful vessel on the Caspian, armed with Uran missiles with a range of 100 miles. Later this year the Tatarstan will be joined by a sister ship, the Dagestan.

The Caspian Sea Flotilla is also taking delivery of the first in a series of new Project 21631 Buyan-M-class rocket-artillery ships, along with three amphibious assault ships.

The Iranian Navy has a total of approximately one hundred, mostly small combat and supports ships on the Caspian. They include three Iranian-made midget submarines (of a North Korean type that can transport a group of combat divers and have a range of 1,200 miles), an outdated Salman-class minesweeper (American-made), and patrol cutters.

Russian analysts believe that Iran however has the ability to increase its Caspian naval forces by 50 percent in short order by relocating craft from the Persian Gulf.

As for the other Caspian littoral states - Azerbaijan, Turkmenistan and Kazakhstan, their naval forces are negligible, to be polite.

So, why is Russia beefing up its naval presence?

One of Washington's key policy tenets since the 1991 collapse of Communism has been to pry out from under Moscow's control as much of the energy assets of the post-Soviet space as possible.

Nowhere has this policy been more evident than in the Caspian basin and the energy riches of the new post-Soviet states of Azerbaijan, Kazakhstan and Turkmenistan. To the north lies Russia, with whom Washington jostles for these assets while Iran rings the Caspian's southern shore, a rogue "axis of evil" member state that Washington has been punishing with sanctions on its energy sector since well before the Evil Empire collapsed.

Now, in a stunning example of naïve hope over geopolitical and economic reality Washington is wooing Turkmenistan, hoping to get a slice of the pie of the world's fourth or fifth-largest natural gas deposits.

What caused the drooling in Beltwayistan was the release in May of a report by the respected British audit firm Gaffney, Cline and Associates on Turkmenistan's gas reserves. The report concluded that the South Yolotan natural gas superfield, discovered in 2006, contains reserves of more than 20 trillion cubic meters of natural gas, enough to satisfy European demand for more than 50 years and making it the second largest gas field ever found. It should be noted here that when in 2006, following the field's discovery, Turkmenistan's megalomania cal ruler, Saparmurat "Turkmenbashi" Niyazov claimed that the discovery boosted the country's reserves up to 24 trillion cubic meters of natural gas, his claims were taken as mere braggadocio, with BP calculating them at slightly more than 1/10th that amount. A similar thing happened two years later, when Gaffney, Cline and Associates first audited South Yolotan, and their findings were initially ridiculed as overstated.

Who's laughing now?

Sometime in the next 12 months, an energy IPO offering in distant Mongolia already has foreign investors salivating.

The darling of the international energy community is coal company Erdenes-Tavan Tolgoi ("Five Hills") Ltd., popularly known as TT, which has yet to begin operations.

To give an idea of the potential foreign interest, analysts believe that the IPO will be handled by Goldman Sachs Group Inc. and Deutsche Bank AG.

What is TT bringing to the market that has caused such interest? A massive deposit located in the east Tsankhi area of the Gobi desert and estimated to hold over 6.4 billion metric tons of coking coal, the world's biggest untapped deposit of its kind.

Mongolia's government is currently selecting an operator for the massive deposit and is expected to be a large, experienced foreign mining company. Heightening investor interest was a successful public offering last fall in the autumn of 2010 by Mongolian Mining Corp., Mongolia's largest privately held domestic producer and exporter of coking coal, whose Ukhaa Khudag (UHG) mine is within the Tavan Tolgoi coal formation in the southern Gobi. Mongolian Mining Corp.'s IPO was floated on the Hong Kong Stock Exchange and raised $651 million.

In contrast, analysts are predicting that the TT IPO could raise as much as $10 billion.

What makes the TT IPO unique is that the Mongolian government has just given each citizen 538 shares in the Erdenes-Tavan Tolgoi IPO. If the IPO hits its anticipated $10 billion, each Mongolian shares would be worth about $360. The government stock giveaway totaled 1.5 billion shares, equal to 10% of TT and reserved another 1.5 billion TT shares for thousands of Mongolian business enterprises. Besides the 20 percent handed out to local enterprises and citizens, the government aims to retain 50 percent of TT, with the remaining 30 percent to be listed on an overseas stock exchange.

The TT stock giveaway is an integral part of a governmental effort to convince its citizens that its decision to pursue large-scale mining in Mongolia will have a direct bearing on their well-being, following several earlier contentious mining deals.

Mongolians complained bitterly about the arrangements surrounding the $6 billion Oyu Tolgoi project, jointly owned by Canada's Ivanhoe Mines , Rio Tinto and the Mongolian government, which will be the world's biggest copper mine outside Chile once full operation starts in 2013.

Underwriting Mongolia's mining boom, two years ago the Ulsyn Ikh Khural (State Great Hural, or Parliament) finally repealed the 68 percent windfall profit tax on foreign mining operations, which came into effect in January, setting the stage for massive foreign investment.

Even Russia has gotten into the act. Earlier this month, Mongolian President Tsakhiagiin Elbegdorj visited Moscow and met with Russian President Dmitrii Medvedev, who commented on rising bilateral trade possibilities, "We need new powerful projects such as nuclear projects or Tavan-Tolgoi, which will promote bilateral cooperation."

Besides coal, copper and gold, Mongolia has massive deposits of other materials the world desires, including uranium and rare earth elements (REEs.) As these deposits are developed, analysts predict the economy will flourish, with the International Monetary Fund predicting that Mongolia's annual economic growth may surge to 23 percent in 2013 as Oyu Tolgoi and other projects begin production.

With energy-hungry China next door, a Mongolian energy or mining investment is looking like one of the global economy's more certain bets, and in the case of TT, one doesn't need the resources of a Goldman Sachs to buy in - yet.

Source: www.oilprice.com

By. Dr. John C.K. Daly for OilPrice.com. For more information on oil prices and other commodity related topics please visit www.oilprice.com

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SITUATION: In early 2009, Russia inaugurated its first liquefied natural gas (LNG) plant for East Asia at Sakhalin. After ramping up to three times its initial capacity, it will supply roughly 5% of world LNG. It is currently expected that Japan will receive two-thirds of initial exports with the rest going to South Korea and North America.

ANALYSIS:

Sakhalin is a long north-south island in Russia's Far East close to the mainland. Its southern tip is not far from Japan's northernmost point. Hydrocarbon deposits around it are estimated to contain 14 billion barrels of oil and 2.7 trillion cubic meters of natural gas. These are being developed by consortia including such major Western energy companies as Royal Dutch Shell and ExxonMobil. The latter operates the consortium that produces from the first of six planned stages of Sakhalin hydrocarbon development.

The Sakhalin-1 development comprises three deposits. The first is under production, the second is under development, and the third is under exploration.

Oil from the Chaivo deposit started to run through a pipeline to the De-Kastri terminal in Russia's Khabarovsk Krai in September 2006.

Drilling at the Oduptu oil and gas field began in May 2009, and commercial production began in September 2010. The product goes to the Chaivo processing facility and then to the De-Kastri for export.

The Arkutun-Dagi field is yet to be developed, but first oil is expected in 2014; it will also go to De-Kastri via Chaivo.

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New strategic brinkmanship by the Democratic People's Republic of Korea (DPRK); a now-clear determination by the People's Republic of China (PRC) to "more aggressively assert its territorial claims in regional waters"; the near-collapse of Japanese strategic cohesion during 2010; and the increasing signs of US political caution in North-East Asia, all point to a period of strategic concern for the Republic of China, particularly in its maritime responsibilities.

What is of particular concern is that the casus belli -- the legitimate cause and act of war -- thrown down by the DPRK with the March 26, 2010, sinking of the South Korean Po Hang-class corvette, ROKS Cheonan, highlighted the lack of readiness of the ROK, the US, and Japan to be able to handle any major regional crisis. This in turn highlights the extreme vulnerability of the Republic of China, given that the US is showing great reluctance to support the Republic of Korea, and would be even more reluctant to take major steps to support the ROC at this particular time.

As well, the sinking of the Cheonan highlighted the vulnerability of the ROK Navy to even fairly basic submarine attack, emphasizing the concern which all navies -- including the US -- must have for improving anti-submarine warfare (ASW).

As a result, the naval and maritime strategies, doctrine, and options of the Republic of China Navy (ROCN) face a period of great challenge, and the need for serious review. The ROCN has grown to become a highly-professional, technologically-advanced, world-class navy, but it must now function in a new ocean of uncertainty, and in the expectation that it will not have a reliable network of alliances.

The ROC is at a watershed, a pivotal point, in its history, and this transition point has been a long time in coming. Finally, however, both the ROC and its allies must face serious decisions, and, inevitably, the ROC Navy is very much at the heart of this great challenge.

The strategic circumstances surrounding the ROC have changed, even in ways which might not, at first glance appear to have been determined solely by the end of the Cold War in 1990-91. Some of the changes in the Republic of China's overall strategic position were, of course, determined during the Cold War, first by the move in late 1971 by the United Nations to transfer the Chinese membership in the world body, of which Chiang Kai-shek's ROC was a founder in 1945-46, from the ROC, and grant it to the People's Republic of China (PRC).

Next came the initiative in 1972 of US Pres. Richard Nixon to open ties with the People's Republic of China (PRC) as a means of breaking Beijing away from Moscow. Following that, US Pres. Jimmy Carter on January 1, 1979, recognized the People's Republic of China as the sole government of China, and unilaterally moved the US away from its alliance the ROC. Essentially, Carter unilaterally broke a binding alliance structure, a fact which should not go unnoticed by the United States' many other allies around the world. Carter's initiative to abandon the ROC was a move of appeasement toward the PRC, but, in many respects, it could have been seen as inevitable, given the strategic mass of the PRC in comparison with that of the ROC.

Even earlier, as well, the policy of the US John F. Kennedy Administration (1961 to 1963) was to restrain the Republic of China from taking advantage of the disarray at that time on the mainland. The Kennedy Administration policy at the time was to ensure that the ROC did not launch a military assault against the communist forces on the mainland, perhaps starting a major conflict in which the US could become embroiled at a time in which Washington was already engaged in brinkmanship with the USSR.

KYRGYZSTAN TODAY

Kyrgyzstan's interim government, having toppled the corrupt regime of former President Kurmanbek Bakiyev in Bishkek on April 7-8, faces many daunting challenges, from the economy gutted by Bakiyev's insiders to reestablishing security in the country. It is in the interest of the three major outside players there - Russia, U.S. and China, to assist Otumbayeva's administration, but it seems problematic at this point whether they will be able to lay aside their traditional rivalry to do so. Such being the case, it would seem that Kyrgyzstan faces a long, hot summer.

The new Kyrgyz provisional government is caught between a rock and a hard place, trying to gain international legitimacy while maintaining its domestic popularity. Bakiyev left behind a state bankrupted by massive corruption and crime, which generated deep public resentment. For outside powers, the suddenness of the collapse of the Bakiyev administration collapsed is a stark reminder, particularly for Washington, of the inherent risks of focusing obsessively on Western security concerns in framing policy towards the region while ignoring the democratic values proclaimed at each and every opportunity.

LAW AND ORDER

The first priority of the interim administration was to re-establish law and order against wide-scale looting and anarchy. On 8 April, the first day of its ascension to power, the interim government's Interior Minister Bolot Sherniyazov said on state television, "Today I have permitted weapons to be used against looters. I appeal to people of the capital to join people's militias and rise to the defense of the property of the city, companies and people." The harsh measure apparently worked, as no deaths were reported.

After noting that on 7 April the Kyrgyz Armed Forces "took the side of the people and started to tackle their tasks obeying demands and orders issued by the interim government," Acting Defense Minister Ismail Isakov stated that "army units and divisions have been put on high alert. Apart from fulfilling their own duties, they are playing a huge role in the Interior Ministry's efforts to bring order back both to Bishkek, Osh and Jalal-Abad." Seeking to identify the rioters and looters on 30 April interim government First Deputy Prime Minister Almazbek Atambayev said that the government was prepared to pay a bounty to those assist authorities to catch suspects facing criminal charges in connection with the 6-8 April events.

As if to underline the fragility of the situation however, the same day that Atambayev spoke 300 Kyrgyz police officers visited the Interior Ministry to demand a meeting with the ministry administration, with one demonstrator noting, "We demand the payments that were promised to us by the interim government to compensate for the physical damage done to the police officers hurt in the 6-8 April events."

A NEW CONSTITUTION

During a 29 April interview with Interfax Otumbayeva laid out her administration's priorities. Topping the list is the drawing up of a new constitution, to be submitted to the electorate in a national referendum on 27 June. The Kyrgyz electoral commission plans to spend almost $3 million on the referendum. The new draft constitution envisages transforming Kyrgyzstan into a parliamentary republic with a multi-party democratic system. Interim government deputy Prime Minister Omurbek Tekebayev said that the new document substantially reduces presidential powers and that the Prime Minister will be the key figure in the new political system.

A lack of formal recognition is hobbling the new administration, as it precludes approaching major international investment agencies for assistance. Otumbayeva said, "Our power is still not legitimate. Not legitimate in the sense that we have still not covered the entire path necessary for a law-governed state that would permit us to declare our government a people's government, and our state -- democratic. Formally we are still members of all the international organizations: the United Nations, the Commonwealth of Independent States, the Collective Security Treaty Organization, the Shanghai Cooperation Organization and so forth. But the absence of legal formalities prevents us from exercising all the rights that membership in these organizations offers. For example, international financial institutions, to put it politely, are in no hurry to issue the credits that we need so much. Unfortunately that is the case."

HOLDING THE BAKIYEV REGIME ACCOUNTABLE

The interim government is moving swiftly to document the political crimes and economic corruption of the previous administration. On 28 April the General Prosecutor's Office issued a list of those to be charged with criminal responsibility for the 7 April shootings in Bishkek's Ala-Too central square, which killed 85 and wounded more than 1,000. The list includes Bakiyev's brother Zhanybek, former head of the State Security Service (SSS); Marat Bakiyev, the President's eldest son and former State National Security Service (SNSS) Assistant Chairman; former deputy SSS chief Daniyar Dunganov; former SSS First Deputy Chairman Nurlan Temirbaev; Bakiyev's cousin, former Minister of Defense Baktybek Kalyev, former SNSS Chairman Murat Sutalinov; former Prime Minister Daniyar Usenov; Bakiyev's former advisor on defense and security Elmurza Satybaldiev and former Minister of Internal Affairs Moldomusa Kongantiev. Dunganov, Kalyev and Kongantiev are in the SNSS pre-trial detention center and Satybaldiev is cooperating with authorities. Zhanybek and Marat Bakiyev, Temirbayev, Sutalinov and Usenov have all been charged in absentia and the government is seeking them.