_ Why is U.S. so anxious to block

_ construction of Siberian pipeline?

By Genrikh Bazhenov

Debates continue in the West over the
deal of the century-the agreement on
the delivery of Siberian gas to Western
Europe. Addressing a Senate subcom-
Mittee recently, U.S. Undersecretary of
Defense Fred C. Ikle declared that the
Administration ‘‘views the project as
_ threatening to the unity of the Atlantic
Alliance, while it contributes at the
Same time to the economic strength of
_ the Soviet Union ... And while much
Water is over the dam, there remains a
Chance to reduce or replace the pipeline
project.”

By this, Washington is evidently re-
ferring to agreements on credits for the
€xport of equipment and pipes con-
cluded by Soviet foreign trade organiza-
tions with banks of West Germany,

France, Great Britain, Japan and Austria
in the autumn of 1981 and in February-

March 1982, and the new large contract

with the West German Mannesmann

firm on the delivery of 22 compressor
_ Stations for the Siberian pipeline.

It is known on the banks of the .

Potomac that construction of the gas
Pipeline is in full swing and that its
completion will not be prevented by the
White House’s ban on the delivery by
American firms of pipelayers and parts
for turbines.

The pipeline will be 5,000 km (3,125
miles) long, and in 1984 it will start sup-
plying West Germany, France, Italy
and Austria, and later, Belgium the
Netherlands and Switzerland with 40
billion cubic meters of gas initially from
the Urengoiand then from the Yamburg
deposit on the Yamal Peninsula.

Contrary to the contention that ‘‘the
Soviet Union has managed to get the
Pipeline financed enue by loans at
_ below-market interest rates from
_ Western European banks’ (New York
Times), Soviet organizations have in-

vested at least three-four rubles for
every dollar’s worth of imported
€quipment. In addition to the export
Pipeline, another five pipelines from
Western Siberia to the European center
of the USSR will be built in the 11th
five-year-plan period (1981-85).

Despite the increase in the cost of
Sas (between the early 1960s and the
Mid 70s, it rose by 350% ), the use of this
type of energy is more economical than
others. To pipe 1,000 cubic meters of gas
Over a distance of 3,000 km costs half of
what it does to ship a ton of coal over the
Same distance by the cheapest water
transport.

In the past 30 years, the total length
of trunk pipelines in the USSR.has
grown 60-fold and presently exceeds the
entire West European network. Over
1976-80 alone, about 20 billion rubles
Were invested in the development of the
Soviet gas industry.

These expenses quickly repay them-
Selves. According to Western esti-
Mates, the Soviet Union will be receiv-
ing about $5-6 billion for its Siberian
gas annually, and this will enable it to
- Tecoup the foreign currency invest-
ments laid out for construction within
three or four years.

“Investments in Siberian gas will be-
hefit the West European importers as
Well, enabling them to diversify their
energy sources and lessen their depend-
ence on U.S. monopolies, although
€ven taking the latest contracts into ac-
count, the share of Soviet gas will not
exeeed 5-6% of the total energy re-

Not dependence on USSR,
but independence of U.S.

quirements of West Germany, France,
and Italy. ;

In July 1981, Washington suggested
that the West Europeans replace Soviet
gas with American coal. The
Washington Post noted recently that “in
the high councils of the Reagan Ad-
ministration, the issue has emerged as
a test of where top officials stand : . .on
the fundamentals of Soviet-American
relations.’ What are these ‘‘fundamen-
tals’? ;

The paper quoted the vice-
president of the National Coal Associa-
tion as saying that “‘the new Soviet gas,
when delivered to Western Europe,
would be equivalent to an additional 90
million tons of (American-G.B.) coal.”
Such revelations suggest the idea that
the striving to torpedo the ‘“‘gas-pipes’”’
project is determined first of all by
mercenary considerations.

But it is not money alone that is at
issue here: very active attempts to re-
duce the scale or slow down the con-
struction of the planned pipeline have
been made by the Washingon ‘“‘hawks.”
Thus, the alliance of the part of U.S. big
business interested in keeping Western
Europe dependent on the American oil
and coal magnates and the military-
political elite of the Republican Ad-
ministration is quite explicit... .

_ According to estimates by experts of
the International Energy Agency
(IEA), uniting the majority of de-
veloped capitalist countries belonging
to the Organization for Economic Coop-
eration and Development (OECD), by
the year 2000 their requirements in
natural gas will go up by 38% over 1980

Besides Soviet-made equipment, machinery from many countries of the world Is used Inlaying

the Urengoy-Western Europe gas pipeline.

to an annual figure of about 1,200 billion
cubic meters.

Presently estimated at 13,500 bill-
ion cubic meters, the surveyed gas re-
serves in the OECD countries may grow
four-fold by 2000. Nevertheless, the IEA
maintains, the growing requirements
will be satisfied by imports from non-
OECD countries. ...

In the early 1970s, the United States’
interest in the development of Siberian
gas deposits was embodied in the
“North Star” project, yet it never went
beyond the stage of negotiations. Why?...

U.S. banks were unable to provide
the Soviet Union with sufficient credits
to finance the project because of dis-
criminatory legislation enacted by
Congress in 1974.

Therefore, the American firms re-
vised the project. According to the new
version the equipment and credits were
to be obtained in Western Europe. Gaz
de France was to build the liquefaction
plant; Mannesmann (West Germany),
to deliver pipes and compressor sta-
ions; Brown and Root of Britain, to sup-
ply pipelaying machines. The Ameri-
can companies were to coordinate the
realization of the project and finance
equipment deliveries jointly with Gaz
de France and British banks.

Taking into account the “‘internatio-

nalization’’ of the project, the deliveries
of liquefied gas over a period of 25 years
were to be divided between the United
States (15 billion cubic meters annual-

‘ly) and France (five billion cubic met-

ers.)

The American firms’ attempts to get
around the barriers thrown up by Con-
gress testified to their desire to have the
project implemented. But in the course
of the talks, disagreements emerged on
such questions as choice of route, the
base price of gas, and shipping terms.
And what is more important, the Soviet
Union was supposed to build the
pipeline first, to receive foreign cur-
rency for gas exports, and only then to
tackle its own energy problems.

In effect, we were to divert billions
of rubles from the development of our
national economy to ensure deliveries
of gas to the United States. Effective
returns to the economy of the USSR
from the ‘‘North Star’ project could be
expected only 8-10 years after its com-
pletion.

Naturally, the Soviet side could not
agree to this. Soviet representatives
pointed out that currency receipts from
the export of liquefied gas were not an
end in itself. Our main task was com-
prehensively to develop our own energy
base, with maximum benefits to the na-
tional economy. .. .

A different approach was adopted by
the West European countries. Unlike
“North Star,” the ‘‘gas-pipes”’ project
was in keeping with the main principle
of economic relations —mutual benefit.
In the course of the talks, our West
European partners did not lay down un-
acceptable conditions. Moreover, a
number of countries evinced a desire to
supply equipment and pipes for other
Soviet gas pipelines to secure large or-
ders for their manufacturing industry.

According to some unofficial West-
ern estimates, the construction of the
gas pipeline from Siberia to Western |
Europe would mean orders worth about
$4.5 billion for West German firms, $3.5
billion for French firms, $1 billion each
for Dutch and Italian firms, $800 billion
for Belgian firms and $600 million for
Japanese firms. The figures are quite
impressive. _

The list coud have included Ameri-
can companies, but as a result of
Reagan’s ‘“‘sanctions,’”’ they now can
count up their losses. It has been esti-
mated in U.S. Congressional quarters
that in the past six months alone these
losses have totalled $850 million.

Assessing the effectiveness of the
“sanctions,’’ Ernest Johnston, deputy
assistant secretary of state for
economic and business affairs, admit-
ted in a House of Representatives sub-
committee that the United States ‘‘can-
not markedly reduce the volume or in-
crease the cost of Soviet energy produc-
tion through unilateral export con-
trols.’’ So Washington is trying to com-
plicate the realization of the ‘‘gas-
pipes’ project by overt pressure on its
NATO allies, imposing upon them “‘uni-
form political criteria” in the approach
to East-West economic ties.

Washington is engaging in demag-
ogy regarding the alleged danger to the
West which the consolidation of the
Soviet energy potential poses simply to
cover up its self-seeking designs to re-
tain control over a considerable part of
energy supplies to the capitalist world,
and to prevent the.erosion of the posi-
tions of U.S. oil imperialism.

Excerpted from New Times .

PACIFIC TRIBUNE—AUGUST 6, 1982—Page 3