There are large deposits of oil and natural gas in the Caspian Sea region.
The main problem is getting these resources to markets.
Pipelines are required to service the large markets in North America, Europe, and E. Asia.
Two Pipelines in Greater Detail Main participants in these two pipelines: Tengiz to Novorossiysk Russian Federation 24% Repub. Of Kazakhstan 19% Sultanate of Oman 7% Chevron 15% LUKARCO 12.5% Rosneft/Shell 7.5% Mobil 7.5% Agip 2% Turkmenistan to Pakistan: Unocal, Gazprom, Hyundai, Itochu, Delta Oil (Saudi Arabia)
The small Saudi population permits them the luxury of varying the amount of oil that they sell (thereby controlling prices):
When they want the price to increase they sell less
When they want the price to decrease they sell more
Figure 9-10. Saudi Export Revenues and Foreign Currency Reserves, 1960-2005, in Billions of Current Dollars Source: World Development Indicators 2007 ; and Saudi Arabian Monetary Agency, Annual Report , Monetary and Banking Statistics .
This Puts the United States in a Strange Position
The U.S. wants the price of oil to be low, and it views the Saudis as a moderates within OPEC.
Saudi Arabian donors funded the Mujaheddin in Afghanistan and many of the Islamic schools that were the recruiting grounds for both Taliban and Al Qaeda fighters.
The Three Periods Period Dates Type of Governance Bretton Woods 1945-1971 Hegemonic Interdependence 1971-1989 Collective Globalization 1989-present Global
Evolution of Subsystems Subsystems Bretton Woods Interdependence Globalization North-North Creation of US-dominated regimes Floating replaces fixed exchange-rates; Major challenges to US hegemony EU expansion and the creation of Euro; the US reemerges as hegemonic North-South Bipolar competition NIEO, OPEC, increasing gaps w/in the South Rise of Asian NICs and the Washington Consensus
What Happens to Specific Regimes? Regimes Bretton Woods Interdependence Globalization Monetary Fixed but adjustable rates Dirty Float Dirty Float; greater concerns about crises Trade GATT GATT challenged (even by US) WTO; rise of the anti-globalization movement Investment Few rules other than retaliation Period of nationalizations TRIMs within the WTO; but MAI fails; rise of BITs