12 April 2001

Bush Administration Policy Toward Caspian Area, South Caucasus

U.S. policy toward the Caspian and the development of energy resources in the region is not expected to change under the new administration of President George W. Bush, according to State Department official Elizabeth Jones.

"The fundamental work that we do is to provide and develop the economic and political backdrop against which these kinds of commercial projects can go forward," she said.

Ambassador Jones, the administration's senior advisor on Caspian Basin energy diplomacy and President Bush's nominee to be Assistant Secretary of State for European Affairs, spoke to audiences in Georgia, Azerbaijan, Kazakhstan, and Turkey during an April 12 State Department interactive television broadcast. She answered questions on a range of issues affecting the transport of oil and natural gas from the Caspian to markets to the west.

The United States' position is 'anti-monopoly', Jones said, and it believes any kind of large economic project like the Aktau-Baku-Tbilisi-Ceyhan oil pipeline will be a stabilizing factor in the countries in which it is established.

Asked about security for the project, Jones said it is the responsibility of each country through which the pipeline passes, and that security measures would have to be coordinated "up and down the line." She added that the United States is working with the countries and companies involved on appropriate training for those who will provide security.

On the status of the trans-Caspian gas pipeline, Jones said that, unfortunately, the project is "on hold" until Turkmenistan makes a decision on renewing discussions with Turkey. "We haven't closed the door on that possibility," she said, "but it's really up to Turkmenistan to move ahead when it sees fit."

One member of the television audience asked Ambassador Jones if the United States is ready to use force to counter possible influence on the region from Afghanistan's Taliban regime. No, she replied, but the United States is providing assistance through NATO's Partnership for Peace and through civil counterterrorism programs so countries "can defend themselves."

"We look forward very much to intensifying our ability to cooperate on exactly those kinds of issues, because they are a threat to not only the countries in the region but to the rest of the civilized world as well," she said.

Jones also answered questions on environmental issues, energy security for Georgia, Armenia's role "as part of the energy network in the region," and Turkey's ability to fulfill its financial commitments to the oil pipeline project.

Following is a transcript of the program:

"Dialogue"
United States Department of State
Office of Broadcast Services, Washington, D.C.
Guest: Ambassador Elizabeth Jones, U.S., Department of State
Topic: Caspian Pipeline - Bush administration Policy Towards the Caspian Area and South Caucasus Area
Posts: Tbilisi, Baku, Almaty, Ankara
Host: Nathan Roberts
Date: April 12, 2001

Mr. Roberts: I'm Nathan Roberts, your host.

Last April, Georgia initialed its host government agreement, the final piece of the framework document for the Baku-Tbilisi-Ceyhan oil pipeline. Then, in November, basic engineering began for the pipeline's construction, followed by a financing meeting in December between OPIC [U.S. Overseas Private Investment Corporation], the Export-Import Bank, and the sponsor groups of investors. And just last month, Kazakhstan, Georgia, Azerbaijan and Turkey signed a memorandum of understanding, launching negotiations for Kazakhstan to join this east-west energy transportation route. All are steps towards the realization of this new, safe, direct oil route from the Caspian to world markets, which will increase global security and benefit international energy markets.

The east-west transportation corridor will also bolster the independence and prosperity of the Caspian's new states, strengthen regional cooperation, and increase foreign investment.

The United States has supported a Baku-Tbilisi-Ceyhan route as part of its multiple export pipeline policy. But how will the new administration affect this policy? Here today to discuss the Caspian energy and transportation routes and U.S. policy toward the region, we welcome our distinguished guest, Ambassador Elizabeth Jones. We also welcome our participants standing by in Tbilisi, Baku, Almaty and Ankara. But before we join them, I am going to ask Ambassador Jones to briefly highlight what, if any, changes in U.S. policy toward the Caspian and South Caucasus region can be expected from this new administration.

Amb. Jones: Thank you, good evening. We expect no changes at all in the new administration in its support for the Aktau-Baku-Tbilisi-Ceyhan transportation route. The important thing that this transportation route, and the pipeline itself, is demonstrating its commercial viability, and I will be very grateful to hear your questions and comments on this very important subject.

Mr. Roberts: Thanks very much, Ambassador Jones. So with that in mind, let's join our participants in Tbilisi for their first question. Go ahead, Tbilisi, with your question please.

Q: Thank you very much. We welcome you from Tbilisi, and thank you very much, Ambassador Jones, that you agreed to participate in the interactive dialogue.

I would like to inform you that the guest in our studio, Mr. -- (inaudible) -- president of Georgia international work consortium.

Amb. Jones: Very nice to talk to you.

Q: And the first question is the following: So is the Baku-Tbilisi-Ceyhan pipeline or Aktau-Baku-Tbilisi-Ceyhan pipeline, a potential stabilizing factor for Georgia? And I would like to remind you the commentary that you, Ambassador Jones, made recently, that this is not a project that is directed or targeted against Russia; this is a project targeted against any monopoly.

Amb. Jones: Certainly it is our belief that any kind of large economic project like this, particularly one that is commercially viable, is a stabilizing factor in any of the countries in which it is established. That would certainly be the case for Georgia, because of the jobs it provides, because of the revenue that it will bring, and because of our understanding with the government of Georgia and the other governments involved that those revenues will be used for the improvement of lives of the people of Georgia.

As you mentioned, we believe that this transportation route is but one of many valid and viable transportation routes for energy in the region. It is the policy of the United States, just as it is the policy of Russia, not to insist on having a monopoly of transportation for energy. So, as I have said in the past, this transportation route, this pipeline, is by no means anti-Russian, but it is anti-monopoly.

Mr. Roberts: Tbilisi, thank you very much for that first question. Let's move to Baku for your first question for Ambassador Jones please. (Technical difficulties.) Okay, Baku, if you hear me, please ask your question in Russian, and we'll translate. Go ahead, Baku, in Russian please.

Q: Since something is being discussed between Washington, Ankara and the other countries, and Georgia, I wanted to ask the problem is that the main thing is a security issue -- Who will provide for the security of this pipeline? What will be the status of this structure that provides this, and who will play the main role in providing the security? Thank you.

Amb. Jones: Thank you very much. That's a very good question, and it's an issue on which the countries and the sponsor groups -- that is the private companies -- are working very hard. And the United States is also participating.

The arrangement is for each country through which the pipeline travels to be responsible for security on that part of that pipeline. Obviously there has to be coordination among the three countries in terms of providing security up and down the line. The United States is working with the companies and with the countries in terms of the kind of training that might be appropriate for those who will provide security. There is discussion among the three about what kind of communications would make the most sense up and down the pipeline. But that is very much an issue that is relevant, and it is one that all of the three countries, the United States, and the companies involved, are all working on at the moment.

Mr. Roberts: Baku, thank you very much for your question. And, Almaty, your first question now. And again, if you would, please ask your question in Russian, Almaty.

Q: Mrs. Jones, there are both optimistic and pessimistic prognoses for the pipeline. In addition to certain additional persons in Kazakhstan, no one has confirmed the prognosis about large expenditures. The official persons are very careful in their comments. In this regard, on what is based the insistence on which the U.S. has its policy on this issue? Do the official persons in the U.S. know something that others don't know about the prognosis about the deposits in Kashagan?

Amb. Jones: No, I can assure you that there is no one in the United States government that knows more about Kashagan or knows more about the costs involved in the pipeline than the government of Kazakhstan in terms of Kashagan or the companies themselves involved. They will always have the first information, because this is after all a commercial, a private commercial deal both in terms of Kashagan in the Caspian and in terms of the pipeline itself.

The costs on the pipeline project are estimated to be between $2.3 billion and $2.7 billion. But that cost will be determined by the basic engineering that is underway on the pipeline right now, that will progress hopefully to detailed engineering in about June, in another month and a half. The engineering work is meant to determine a lot in much greater detail what the expenses would be -- how many pumping stations there would need to be, what are the geological impediments to building the pipeline that have to be overcome through possibly more extensive and expert engineering. But the costs themselves are something that will be determined by engineering, and then the companies involved, the sponsors groups, will get together and decide how to put together its financing package and go to the international financial institutions to determine how best to finance the construction of the project itself. The United States government is not involved in the financing directly; nor do we have any special information on the volumes of oil that might be in Kashagan.

Mr. Roberts: All right, thanks very much for your question, Almaty. We want to turn now to Ankara, and if you would, first of all, Ankara, turn your speakers down so we don't create a situation with feedback. And go ahead with your first question, in English, for Ambassador Jones. Ankara?

Q: And my question will be on trade, focused trade -- that's the transportation of risky materials such as oil. It's a serious risk, serious threat, to the security of the trade, and also for the environment. My question is: Do you find suitable the use of this trade as an oil road in spite of all the risks?

Amb. Jones: Of course the Baku-Tbilisi-Ceyhan pipeline route was meant exactly to counteract and provide an alternative to the difficulties of transporting oil through the Bosporus, through the Turkish straits.

The United States understands and supports Turkey's commitment to the Montreal Convention, which allows free transportation, free shipment of goods through the Turkish straits. But at the same time, any reasonable person understands that there is a limit to how many tankers, how many ships can go through the straits and then of course can go back and forth across the straits as happens right in Istanbul. And therefore Turkey, Azerbaijan and Georgia, with help from the United States, determined that it made much more sense to provide an alternative so that all of the oil that was expected to come out of Azerbaijan, and of course out of Kazakhstan, would have a second option -- a way to get to the Mediterranean that would be much more environmentally sensitive, much more environmentally sound and secure, than insisting on putting all that oil through the Turkish straits.

That is not to say that we think that Turkey will put a limit on the shipping, but nature will eventually put a limit on that shipping. There just is not enough room very every single tanker and every single container ship to go through the Turkish straits with the speed that the shippers would like. So an alterative is absolutely essential, and that's what the pipeline gives us.

Mr. Roberts: Ankara, thank you very much for your question. We are going to return now to Tbilisi. And, Tbilisi, I would ask you also to please turn your speakers down as we turn it over to you for the next group of questions. Go ahead Tbilisi.

Q: Thank you very much. I think my colleague from Baku touched upon the same issue that I am going to ask you. So the recent visit by the U.S. high-ranking officials, including Mr. Louis Freeh, to Georgia demonstrates an increased interest by the United States towards this country and the region. Is this somehow affiliated with the BTC security issues in the south Caucasus, and Georgia per se?

Amb. Jones: Of course the visit of FBI [U.S. Federal Bureau of Investigation] Director Louis Freeh recently was an important element in the U.S. relationship with Georgia. We have a very, very close relationship with Georgia, and have had for many, many years now. The FBI and some of the elements could be involved for instance in some of the training that might be provided to provide security on the pipeline, and as part of the integrated policy that the U.S. government pursues with regard to Georgia. And, as you note in your question, it is a demonstration of the close U.S. relationship with Georgia.

Q: I would like to ask Mr. -- (inaudible) -- to ask you a question. He is here in the capacity of an expert.

Amb. Jones: Thank you.

Q: I would like to welcome Ambassador Jones. And we are very glad to have you in the studio, so the whole population in Georgia is watching the program now. So, welcome back to Georgia now.

Amb. Jones: Thank you.

Q: When we are discussing the security issues of the pipeline, I would like to point out one factor which is very significant for Georgia. This is the issue related to energy security for Georgia and for the whole region. You all well understand the situation which Georgia found itself in during the winter season, and the gas supply was cut off and we found ourselves in an energy sort of blockade, and we managed to survive, thanks to the assistance from the United States. And as a result of the direct involvement of President Bush, the problem was addressed for Georgia. I know that the United States is doing its best to support Georgia for the future winter season, and supply Georgia with energy supplies and energy resources -- gas in the first place, and mainly gas. So what will be your strategy in terms of helping Georgia in that respect?

Amb. Jones: Thank you for this question, Mr. Shantari (ph). I am delighted to talk to you, even though I can't see you, which I regret. This is an important question. You are absolutely right: the United States was very concerned about the energy cut-off to Georgia last winter, as was the European Union. And I'd like to underscore the role that the European Union leadership played and the involvement of the member states in helping Georgia solve the energy difficulties of last winter as well.

We look forward to working again with Georgia, with the European Union, and with Georgia's neighbors, with Azerbaijan and Turkey, to find solutions for the energy difficulties that Georgia has had in the past, and could have this coming winter as well.

I think that we are well on the way to finding some very imaginative solutions with some of our very good colleagues in the region. The companies that are involved in producing oil and gas in Azerbaijan are also involved in finding imaginative solutions, as is AES, the American company that generates electricity in Georgia, and will also be part of the solution.

I am not sure I can detail every single part of that, but certainly the energy coordinating committee within Georgia, with which the U.S. Embassy works very closely, will take the lead, I think, Mr. Shantari (ph), in working on some of these imaginative solutions so that we do not get to an energy crisis again in Georgia.

In the meantime, I think it's very, very important -- and I know that President Bush and Secretary Powell are very concerned about this as well -- is for Georgia to maintain its energy independence and maintain control over the internal distribution system for gas supplies in Georgia. That is very important for Georgia's energy security in the future as well. Thank you.

Q: So thank you very much for your answer, and we hope that the American administration will not find any need to make further statements with respect to cutting the gas supply to Georgia.

Amb. Jones: I agree. We all agree on that, thank you.

Q: So once the -- (inaudible) -- issue is sorted out, will there be an issue of reanimation of trans-Caspian gas pipeline reanimated in the United States administration?

Amb. Jones: There could be of course. What you are referring to of course is the gas deal that has just been negotiated between Azerbaijan and Turkey to sell gas in the Shakternist (ph) field in Azerbaijan to Turkey. And of course the gas pipeline would go through Georgia and could also provide -- be a more stable provider of gas to Georgia in the winter.

The other option, another option that has been discussed for quite some time is gas from Turkmenistan to Turkey through the trans-Caspian pipeline. Unfortunately that project is on hold until Turkmenistan determines that it would like to begin discussions with Turkey over that project again. We haven't closed the door on that possibility, but it's really up to Turkmenistan to move ahead when it sees fit. Thank you.

Q: So, the visit of the Iran president in Moscow was the focus of the mass media of the whole world. Western newspaper often write that the route through Iran would be the shortest way to the Western market. Did we expect the United States to sort of improve its relationship with Iran?

Amb. Jones: Let me address basically two things. The question of 'is this the shortest route' I think is an interesting one. It is probably not the shortest route -- it might be about the same. But the more important question is where would a particular oil company like to have its oil sold or transported to. And there are many who would much prefer to have their oil go to the Mediterranean for the European and U.S. markets rather than to the Gulf for the Asian markets. So that's number one. That's a decision that an oil company would make in terms of its worldwide strategy.

The second point is that timing is always an issue with energy transportation routes. There is no real feasibility study that has even been done on doing a pipeline across Iran. If that were to start today it would take maybe a year to do such a study. Then there would be all the engineering that would need to be done, which takes a year and a half to two years, plus the construction, which means that an oil pipeline, if it were to begin tomorrow to try to build one, would be too late for the oil that is planned to be produced in Azerbaijan. That's not to say that it would be too late for all oil in the Caspian. There's always the possibility that it would be needed for oil coming out of other parts of the Caspian Basin. But in the meantime it's not really a viable alternative to the Baku-Tbilisi-Ceyhan or to the Caspian pipeline consortium, because both of those are coming on line in time for production that's planned already.

The broader question though is what about the U.S.-Iranian relationship? The difficulty that we have is that Iran has still not addressed the issues of concern to the United States, which is its support for international terrorism, development of weapons of mass destruction and the opposition to the Middle East peace process. The United States has on the table an offer to enter a dialogue with Iran on the issues that divide us. But unfortunately Iran has not been able to make a decision to take up that offer. In the meantime there is the Iran-Libya Sanctions Act on the books; that is the U.S. law -- the U.S. must enforce that law. And until then I don't foresee that there will be much change in the U.S.-Iranian relationship.

Mr. Roberts: Tbilisi, thank you very much for your questions. We are going to turn to Baku for the next set of questions. And again I would ask you, Baku, to please turn your speakers down and go ahead with your questions for Ambassador Jones. Baku, we are waiting to hear your questions now, and turn your speakers down and go ahead with questions for the ambassador. (Technical difficulties.) All right, we are going to get back to Baku. But right now let's shift over to Almaty. We are going to turn over the next set of questions to Almaty. And one more reminder: Please turn your speakers down, and go ahead Almaty.

Q: Sogonov (ph), Institute of Strategic Research. I have the following question to Ambassador Jones: Will the strategy of the U.S. change in the Caspian in the near term? If yes, what basic goals and priorities will the U.S. have in the area? Thank you.

Amb. Jones: No, there isn't any anticipation of change in U.S. policy with regard to the Caspian. The fundamental work that we do is to provide and develop the economic and political backdrop against which these kinds of commercial projects can go forward. Right now we are working very productively with the government of Kazakhstan under the leadership of Mr. Maksadi Danov (ph), who is working with the Kazakhstan Producers Group -- that is, the oil companies working in Kazakhstan -- to develop the business arrangement that would make it possible for them to ship their oil from Kazakhstan to Baku to join the Baku-Tbilisi-Ceyhan pipeline. Those kinds of business arrangements for example include: developing a transparent tariff regime on the internal pipelines in Kazakhstan; working out what the port arrangements might be to ship the oil and get it onto barges to cross the Caspian; and then what the barging arrangements would be. That way the companies would know what the cost of transportation is, and the way that they can plan ahead and determine how best to get their oil to market in the Mediterranean.

Q: (Off mike) -- Channel 31. The position of the United States with regard to he status of the Caspian -- will you comment on what the Caspian summit has been postponed -- when do you think the problem will be resolved?

Amb. Jones: I would say that in a practical way many of the problems have been resolved to the extent that oil exploration and potential oil production can move ahead. And that is thanks to the excellent work that has already been done by Russia and Azerbaijan to agree on a seabed delimitation and decreeing Russia and Kazakhstan to agree on a seabed delimitation.

I congratulate my colleague, Mr. Kolushni (ph), who is the Russian Caspian coordinator, for all of the work that he is doing to try to make those kinds of agreements with Turkmenistan and Iran, the other states that border the Caspian. But at the moment I don't see the lack of a more formal demarcation agreement to be an impediment to the development of the energy resources in the Caspian.

Q: (Off mike) -- Panorama newspaper. Ambassador Jones, in your opinion, is it realistic to expect to begin a large amount of oil extraction in the Caspian shelf by 2005? And if that's not realistic, what do you think a realistic timeframe is?

Amb. Jones: I'm not the best person to answer that question unfortunately, because so much of the answer to that question depends on environmental issues, it depends on drilling issues, it depends on other exploration issues that are being handled by extremely well qualified but very technical people associated with the offshore consortium associated with ACIOC (ph). Certainly I know the government of Kazakhstan, President Nazarbayev himself, wants very much for oil production to begin by 2005. But I don't have any inside information to be able to evaluate the possibility of that. I certainly hope that's the case, but I don't have the details.

Q: Sogonov (ph), Institute of Strategic Research. I have the following question for Ambassador Jones. All the questions connected with the development and the transportation of oil will be up in the air if we don't resolve the issue of effective measures against terrorism and extremism and narco business in Central Asia. In this regard, what do you see, Ambassador Jones, and future aims of contacts of the U.S. with Central Asian countries in the area of security? Thank you.

Amb. Jones: That's an excellent question. Thank you for that question. There is a tremendous amount of work going on already between Kazakhstan and the United States, between Georgia, the United States, and among the countries in terms of addressing exactly the question of counternarcotics issues, counterterrorism issues related to the security of the pipeline itself and related to the security of transportation routes as they pertain to Kazakhstan. But also in a more general way to address these kinds of security questions with regard to Kazakhstan's borders with all of its neighbors and among the countries in the Caucasus and with Turkey. It's a very, very important question. It's one that requires a lot of work. I think FBI Director Freeh's visit to Georgia recently is evidence of the importance of this issue. And we look forward very much to the very productive working relationship with each of the countries as we work together to resolve these problems.

Q: (Off mike) -- Channel 31. A continuation of this same topic. As you know, Turkmenistan supports the Taliban and has accepted them, and analysts see where the Taliban can really affect the Caspian. Is the U.S. ready to use force? Is an army in the Caspian, or at least are possible scenarios being worked on?

Amb. Jones: Not for the U.S. to use force, no, but to work with the governments and the countries of the region so that they can protect themselves, so that they can defend themselves. And this is being done both on the military-to-military level under the Partnership for Peace program, which is an expansion of NATO, and on the civil administration level that I just addressed, in terms of counterterrorism measures, in terms of enhancing customs abilities on the borders, and all of those kinds of programs. And, as I said, we look forward very much to intensifying our ability to cooperate on exactly those kinds of issues, because they are a threat to not only the countries in the region but to the rest of the civilized world as well.

Q: Ambassador Jones, I would like to make my question more concrete in the following way. As you know, Turkey is the main area against religious extremism in the Mediterranean. In my opinion, the increase of such a counter effect can also be played in Kazakhstan. How do you see the possibility theoretically, or maybe in practical terms the possibility of such a bulwark against the spread of negative elements which were mentioned in the question?

Amb. Jones: I appreciate the question, but I am not sure I can be more specific than I have been in terms of my answer. The United States and each of the countries is working on a great variety of programs to address exactly these kinds of issues in terms of training, in terms o f provision of equipment, in terms of assuring communications among the countries of the region, to trade information and intelligence so that they can better combat any kind of threat against themselves. But I am not sure that there really is greater detail that I can provide in this forum to address your question better. I'm sorry.

Mr. Roberts: All right, thank you very much for your questions, Almaty. We are going to return to Baku. And again, Baku, please turn your speakers down and go ahead with the next set of questions for Ambassador Jones. Baku?

Q: Good day, Washington. A question from the newspaper -- (inaudible) -- we would like to know your opinion about the competition which is possible -- which will be between the CPC, which is already built by Russia and Kazakhstan, and the Baku-Ceyhan, in case this is successful, because in both places American companies are working. We would like to know your opinion basically between American companies in the area.

Amb. Jones: Thank you for the question, because it permits me to say that there is no competition between the companies, and there is no competition between these two pipelines.

As you very correctly point out, there has been -- there are American companies involved in both. But, more importantly, the United States government has been very active in support for the Caspian Pipeline consortium pipeline through Kazakhstan and Russia, just as it is very active in support of the Baku-Tbilisi-Ceyhan pipeline. I personally was very involved in negotiating some of the arrangements in Kazakhstan and with Russia to ensure that CPC could be built, and to ensure that it could be opened later this year. I personally went to Moscow for instance for the signing ceremony -- spent a lot of time with the American companies and other companies to help them find ways to overcome some of the investment impediments that they encountered along the way.

The fundamental point is that it is the belief of the companies involved, and therefore also of the United States, that there is sufficient oil in the region to accommodate both pipelines, that there will be sufficient volumes for both pipelines to be profitable and to do the jobs that each was intended to do. CPC was intended to provide a route for Kazakhstan to get its oil to the West, to the Black Sea, and then out through the Turkish straits. Baku-Tbilisi-Ceyhan was conceptualized in order to allow Azerbaijan to get its oil out to the Mediterranean, but also to bypass the Turkish straits, which is a choke point for tanker traffic and for transportation or energy supplies. So we look forward very much to the opening of CPC later this year. It is a great victory for Russia, for the United States, for Oman, and for all of the companies involved. Just as we look forward to moving from basic engineering to detailed engineering later this year on the Baku-Tbilisi-Ceyhan pipeline.

Mr. Roberts: Baku, we still have a lot of time left for your questions, if you would move right to the microphone and go ahead, ask your questions in Russian again for Ambassador Jones. Baku?

Q: The thing is that in January the Turkish newspapers wrote about the intentions of the new administration to get the Armenians involved in the CPC, and the possibility of visiting this country and discussions on this issue. I would like to hear your opinion on this. In other words, how much -- how possible is this in relations with regard to Armenia and Azerbaijan to attract Armenia into this project? Thank you.

Amb. Jones: There is no possibility that Armenia would be involved in the pipeline itself, in the Baku-Tbilisi-Ceyhan pipeline. The route of that pipeline has already been determined, it has already been negotiated and codified in the intergovernmental agreementthat was signed almost two years ago, and in the host government agreements that we referred to at the beginning of this program. Engineering is under way. There is no possibility of diverting the actual physical location of the pipeline itself.

However, it is certainly expected that Armenia would participate as part of the energy network in the region. There is absolutely no intention to leave out Armenia in any way. How that would be done is really a business decision by the companies involved and the companies that might be involved in that in Armenia. These are commercial deals that we are talking about. But certainly the countries of the region, with the support of the United States and of Russia, could certainly again help provide the political and economic backdrop and conditions that would permit Armenia to participate in some way in the energy networks in the region. Thank you.

Q: Azerbaijani newspaper -- (inaudible) -- what is your opinion about the development of oil projects in the area and the investment climate of the countries that are participating in the level of democracy that is related to this?

Amb. Jones: The United States has a great variety of programs in the countries involved to address exactly those kinds of questions. We have economic reform programs, investment improvement programs to assure for example that the legal frameworks are appropriate to guard against the possibility of corruption. And we talked with the governments and the companies involved at great length to try to find better ways to implement these kinds of programs, and maybe to enhance the programs.

At the same time, we have a tremendous number of programs to promote democracy, to promote democratic reform, and to promote the integration of economic reform programs with democratic reform programs, because each builds on the other in our belief. For instance, some of the democratic reform programs or support programs involve the development and support of non-governmental organizations. Those non-governmental organizations for instance might very well be involved in the promotion of citizens interests and environmental issues which could relate to the pipeline. There might be other programs that relate to training people how to become candidates in an election, in local elections or in country-wide elections: How do you raise money? How do you have a debate? What kinds of questions should be addressed? What kind of civic society questions in terms of education, health, issues that are important to the population -- how should each of those questions be addressed? And how can each of those questions be addressed also by improving economic integration, economic reforms, so that budget monies and revenues go to social welfare sectors of the economy, not just to the budget itself.

Q: Hello, the Caspian energy newspaper. The analysts often express the opinion that the lack of understanding between the U.S. and OPEC [Organization of Petroleum Exporting Countries] can lead to sanctions. What is your opinion that the Iraq oil will go to Ceyhan in the near future? Thank you.

Amb. Jones: I think there are really two parts of the question. I don't think there's any problem between the United States and OPEC per se. We talk to the OPEC countries all the time. It's a very lively dialogue. So the question of OPEC and the United States itself I think we can set aside.

In terms of developing smart sanctions on Iraq, a lot of those sanctions are embedded -- the main sanctions are all embedded in U.N. Security Council Resolution 1284, that was passed two and a half years ago I believe. There are many elements to those sanctions that permit Iraq to purchase any kind of humanitarian goods and infrastructure development goods from the revenues that it receives from sales of oil. The United States completely supports that, and we want to be certain of course that Iraq takes advantage of the oil-for-food program, which is what it is called, in order to actually provide the kind of equipment for infrastructure development and food for its population.

Mr. Roberts: I want to thank Baku for those questions. And now it's time for us to move on to Ankara for your questions for Ambassador Jones. So, Ankara, go ahead.

Q: Ambassador, I'm -- (inaudible) -- in Turkey. Do you think that the economic crisis in Turkey will be a big problem in front of the Baku-Tbilisi-Ceyhan project, when consortiums are asking for finance?

Amb. Jones: I hope not. Certainly I believe it's the intention of the government of Turkey, and it's the intention of others that Turkey is able to resolve its economic difficulties, the financial crisis, as quickly as possible. And in that respect therefore I would not expect there to be difficulties in Turkey being able to get the financing it needs for its section of the pipeline, and to pay for any cost overruns as provided in the intergovernmental agreement, should that come to pass. But that of course would not be an issue for another couple of years.

Q: (Off mike) -- from MTV again. U.S. President Bush has not appointed a special envoy for the Caspian energy resources yet. And my question is how do you comment on this? Will the new administration be as interested as the Clinton administration was to the pipeline project?

Amb. Jones: Yes, absolutely. In fact, I am the one who is still appointed to be the Caspian Basin energy diplomacy envoy if you will, the senior advisor on that issue. I will certainly remain in this job until I have to move on to another one. Certainly as soon as I leave there will be someone else appointed to take my place, someone who is very knowledgeable in the region, who is at a very senior level, exactly as demonstration of the new administration's very strong support for this project and for the commercial viability of this pipeline.

Q: Thank you very much, Ambassador Jones.

Mr. Roberts: Ankara, we are still awaiting your next question for Ambassador Jones. We still have time remaining for your questions. Okay, we are going to assume that you have asked the questions you wish to ask. So let's move back to Tbilisi now for our next question for Ambassador Jones. Go ahead, Tbilisi.

Q: I would like again to follow up the question from my colleague in Baku regarding Armenia. It is understandable that the CPC project involves a certain number of players. But Armenia is the country with a powerful lobby in the United States, and the country which Russia considered to be a stronghold in the Caucasus. Can we anticipate the participation of Armenia in other projects, like gas pipeline projects? And another interesting issue is the involvement of Ukraine in these projects.

Amb. Jones: Let me try to address that question the way you've posed it. Certainly there are many Armenian Americans in the United States -- there is no question about that. There is also no question that Russia and Armenia have a good relationship. But let me also point out the very helpful role that Russia has played with the United States and with France in the Minsk Group in helping to resolve and pushing progress on the Nagorno-Karabakh dispute which has achieved quite a success in Key West late last week. Those negotiations aren't over of course, but I think everyone came away from those very optimistic about the next round that will take place in June in Switzerland.

But, as I said earlier, Armenia is not part of this particular pipeline. Those decisions have long since been made, and they can't be changed. It's extremely complex and expensive to determine the route of a pipeline, and that is not going to change. But that doesn't mean that Armenia is somehow left out. It never was going to be left out, and it won't be left out. Armenia as it stands right now provides, as you know, electricity to Georgia. There is no reason that Armenia can't become an even more integrated member of the energy network in the Caucasus. How that will happen exactly I can't tell you. Those are commercial decisions that will be determined by the companies working in the region, by investors interested in participating, and by discussions among the countries themselves. And we look forward very much to increased stability and peace in the region that could well come about as a result of the ongoing discussions to resolving the natural gas dispute.

Mr. Roberts: Tbilisi, thank you for that question. Let's move now if we can to Almaty for the next question for Ambassador Jones. Almaty, go ahead.

Q: Channel 31. I would like to express my interests on the basis of what information are the engineering studies for Baku-Ceyhan be done if we don't even have approximate data about the amount of oil in the Caspian?

Amb. Jones: Let's be clear here. The Baku-Tbilisi-Ceyhan pipeline is really associated with the Azeri Sharag (ph) production field. And the sponsors, the owners of that production-sharing agreement, have a very clear date as to when they believe their production will be ready to be shipped through the pipeline, which is sort of late 2004 is what they are aiming for. This is a very complex set of decisions, because after all there is a tremendous amount of investment that is put into developing a field and bringing it up to production. That is much, much more expensive, much more investment intensive than just a pipeline. But all of that expense for production brings nothing if there is no way for the oil to get out. So that's why there is so much focus on this pipeline. But the production date for Azeri Sharag (ph) is fairly well established.

You've addressed the question of what about Kashagan -- we don't know what the volumes are there yet, and that's all true. But because there is so much -- there is an expectation that that is a very rich field, there is a lot of thinking going on at this stage -- and it is only thinking -- about, okay, what will the transportation routes be for that oil, for early oil from there? And President Nazarbayev has already said publicly that he would like to have early oil from Kashagan go through the Baku-Tbilisi-Ceyhan pipeline simply because he knows there is space in that pipeline and because he knows that it would make sense for that oil to be delivered to the Mediterranean for sale to Europe and possibly to the United States.

Mr. Roberts: We have time for a brief question and hopefully a brief answer as well, as the question permits, from Baku, as we move now to Baku. Go ahead with again a brief question for Ambassador Jones. Baku?

Q: (Off mike) -- Ambassador Jones, could you comment about the possibility of Kazakhstan oil through the Caspian? The visits of the presidents to Russia said that they were against the pipeline through the bottom of the Caspian. So what do the participants think about this, and Ambassador Jones specifically?

Amb. Jones: I think you must be referring to the Iran-Russia statement that was issued after Mr. Khatemi visited Moscow, in which there was a statement that there was opposition to an environmentally unsafe pipeline crossing the Caspian. Everybody would agree with that: nobody wants an environmentally unsafe pipeline to cross the Caspian. In the meantime, however, what we are discussing is using barges to take oil across the Caspian. There is not current discussion of actually building a pipeline on the bottom of the Caspian. That said, I know the government of Kazakhstan would like very much to eventually find a way to build a pipeline across the Caspian as sort of the quicker, cheaper way to transport the oil. But in the meantime barging of oil is already underway. That's how Tengiz oil gets to market at the moment before CPC opens, and it will be that route that we'll pursue.

Mr. Roberts: Very quickly now, we have time for one more question as we turn to Tbilisi for our final question of the hour. Go ahead, Tbilisi, with a brief question.

Q: Thank you very much. It was not [sic] fortuitous that you mentioned Key West talks. And can we expect the United States administration to get interested in the -- (inaudible) -- conflict since this is the same regional scale conflict?

Amb. Jones: I am not sure I can really answer that question. It's one that I have not been involved in. Of course if there was a need for the United States to be involved, we would certainly consider it. But that is not on the table at the moment.

Mr. Roberts: Okay, thanks very much, Tbilisi. And I do regret we are now out of time and have to conclude our program. I would like to especially thank Ambassador Jones for joining us here today, as well as our participants in Tbilisi, Baku, Almaty and Ankara. And for more information on U.S. policy toward the Caspian and South Caucasus region, the lower one third -- excuse me, go to our Web site, which you will see on the lower part of your screen right here, and that is www.state.gov. From Washington, D.C., for "Dialogue," I'm Nathan Roberts.

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)