The United States and Russia have been jockeying in recent months over a variety of strategic issues, among them Caspian Basin energy export routes. EurasiaNet spoke to A. Elizabeth Jones about recent energy-related developments in the Caspian Basin. Jones was sworn in as Assistant Secretary of State for European Affairs on May 31, 2001. Prior to her appointment as assistant secretary, she had served as US ambassador to Kazakhstan from 1995-98 and as Senior Advisor for Caspian Basin Energy Diplomacy. Jones spoke to EurasiaNet shortly before her latest appointment. The transcript of her comments follows:

EurasiaNet: How would you characterize the continuities and changes in US foreign policy concerning Caspian energy, between the Clinton Administration and the Bush Administration?

Jones: The policy itself has not changed, because the strategic principles underlying U.S. energy policy in the Caspian region have not changed.

EurasiaNet: Would you enumerate those principles?

Jones: There are four of them. First, we support the sovereignty and independence of the states in the region. Second, we seek to promote the economic cooperation and interdependence of the states in the region, as well as with Turkey and Europe. Third, the Caspian region is of interest to the U.S. as a reliable alternative source of energy. Fourth, we seek to promote U.S. investment in the region. We undertake many measures to implement all these goals, and energy policy is one of those measures. We are focused not only on pipelines but also on other aspects of the development of energy transportation: not planning and engineering questions as they relate to pipelines, but for example we have paid attention to the inclusion of volumes from Kazakhstan into the Caspian energy transportation system.

EurasiaNet: You are referring to the Memorandum of Understanding signed earlier this year for Kashagan oil to enter the Baku-Ceyhan pipeline?

Jones: Yes. There is work underway to develop an intergovernmental agreement between Kazakhstan and Azerbaijan to cover the principles that would apply to shipping oil and, eventually, gas across the Caspian. It is necessary to specify how the intergovernmental connections work, what the tax rules would be, and so forth. The goal is to get away from the tendency to want to have a monopoly role in each of those sectors and move towards market. Also the Kazakhstan government and the energy producers in Kazakhstan need to work out the business arrangements that would govern shipments of oil from Aktau into the Baku-Ceyhan line. For example, they would need to ensure the transparency of pipeline rules and of the regulations for calculating costs, as well as decide what the supporting costs would be and provide for

barging arrangements.

EurasiaNet: There is a widespread impression that this is an American attempt to compete with Russia for oil volumes in a zero-sum game.

Jones: I'm glad you brought that up. In fact, the U.S. Government has been consistently working to support the Caspian Pipeline Consortium (CPC).

EurasiaNet: That's the one with the pipeline from the Tengiz in western Kazakhstan, across southern Russia to the Russian port of Novorossiisk on the Black Sea?

Jones: Right. The rumors and reports that the U.S. has opposed to the CPC project because it goes through Russia are simply false. I was the U.S. Ambassador to Kazakhstan from October 1995 to October 1998, when the original structure of the consortium fell apart. The U.S. did a considerable amount of work during those years to convince people that the CPC pipeline could in fact be built, and to assist in the restructuring of the consortium so that it could find financing.

EurasiaNet: The European Union has been trying to promote a stable business environment in the Caspian region, and with specific reference to the energy sector, through such programs as TRACECA and INOGATE. Is there any U.S.-EU cooperation on these matters?

Jones: I visited the EU in Brussels last November along with other U.S. diplomats, and we all agreed, on both sides, that there was a tremendous need for each of us to understand what the other was doing. Mainly we were, first of all, trying to make certain that we didn't overlap in the wrong ways, as we were attempting then to coordinate policy on Ukraine. Later, in January of this year, we worked out a common response to the Russian cut-off of gas supplies to Georgia. Since then, there have been discussions in Brussels between the EU and the U.S. to stay in touch and make sure we are working along complementary lines.

EurasiaNet: But have there been attempts for a more systematic or strategic long-term coordination?

Jones: We had a set of bilateral U.S.-EU discussions set for Washington in April, but they were postponed to July. The agenda is absolutely huge. The intention is to formalize more clearly and carefully all energy work we have because there is so much of it now. It is interesting that the EU interest in coordination came after Putin's visit to Paris last November. They seem to feel, at least in the European Commission, that it would be prudent to diversify Europe's source of gas. So now they are interested in Azerbaijan's gas from the Shah-Deniz deposit reaching Europe via a pipeline through Turkey and Greece.