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154TALIBAN1998 when international oil prices crashed because of the slump indemand due to the Asian economic crisis. Oil prices sunk to a record lowof US$13 a barrel compared to US$25 in 1997, making it uneconomicalto immediately exploit Central Asian oil, which was both expensive toproduce and transport. The break-even price for Central Asian oil wasaround US$18 dollars a barrel- 18 Even though the Baku-Ceyhan routewas no longer viable commercially, Washington continued to pursue itsconstruction as it became the main plank of US policy in Central Asia.Turkey had backed the Afghan Mujaheddin in the 1980s, but its roleremained limited. However, as it developed a Pan-Turkic foreign policy,Ankhara began to actively support the Turkic minorities in Afghanistansuch as the Uzbeks. Ankhara provided financial support to GeneralDostum and twice gave him a home in exile. Turkey became vehementlyopposed to the Taliban, which had created new tensions with its closeally Pakistan. Moreover, the Taliban threat had also pushed Turkey intoa greater understanding with its regional rival Iran.Turkey also played a role in turning around Israel's policy in Afghanistan.Turkey and Israel had developed close military and strategic ties afterthe 1993 Oslo Accords. The Israelis and more significantly some Jewishlobbies in the USA were not initially critical of the Taliban. 19 In linewith the US State Department, Israel saw the Taliban as an anti-Iranianforce which could be used to undermine Iranian influence in Afghanistanand Central Asia. Moreover, the Unocal pipeline across Afghanistanwould impede Iran from developing its own pipelines from Central Asia.Israel's intelligence agency Mossad developed a dialogue with the Talibanthrough Taliban liason offices in the USA and with the oil companies.Pakistan's 1SI supported this dialogue. Even though Pakistan did notrecognize Israel, the ISI had developed links through the CIA withMossad during the Afghan jihad. With initial support from Turkey, Israelalso developed close diplomatic and economic links with Turkmenistan,Uzbekistan and Kazakhstan. Israeli companies invested in agriculture, theoil industry and communications.But as US policy towards the Taliban shifted so did Israel's, as theTaliban gave refuge to Bin Laden and encouraged the drugs trade. Turkeyconvinced Israel that the Taliban were a security threat to the region andcould export Islamic fundamentalism to Central Asia. As the Unocalproject evaporated and Israel realized the aversion its Central Asian alliesand Turkey had towards the Taliban, Mossad opened contacts with theanti-Taliban alliance. Israel now had an interest in seeing that the Tali'ban did not take control of the whole of Afghanistan, even though itremained suspicious of Ahmad Shah Masud's support from Iran. Both theTaliban and the Northern Alliance were to accuse each other of receivingIsraeli support.DICTATORS AND OIL BARONS ~ 155With oil prices crashing in 1999, Iran remained the wild card in thenew Great Game. Iran sits on the second largest gas reserves in the worldand has over 93 bb of proven oil reserves with current oil production at3.6 million/bd. As pipeline projects waned due to low oil prices, Iranstepped in to urge the CARs to export their oil through a direct northsouthpipeline to the Gulf via Iran. This could be built at a fraction of thecost of new pipelines across Turkey, because Iran already had an extensivepipeline network and only needed to add pipeline spurs to connect Iranwith Azerbaijan. 'The Iranian route for Central Asian oil is the safest,most economic and easiest. The total cost for Iran would be US$300,000.How does that compare with US$3 billion for a pipeline through Turkey?'Ali Majedi, Iran's Deputy Minister of Oil said in Tehran. 20 Moreover,Iran was also in competition with Turkmenistan to build a gas exportpipeline to India and Pakistan - a much more attractive route because itwould avoid Afghanistan. 21In the first phase of its programme, Iran proposed swapping its crudeoil with Central Asian crude. Since 1998 crude from Kazakhstan andTurkmenistan has been transported across the Caspian Sea to Iran's Caspianport of Neka, where it is refined and consumed in Iran. In exchangeIran allowed companies to lift oil from Iranian ports on the Gulf. Withpipeline projects indefinitely delayed, this appealed to the oil companieswho, despite US pressure not to do so, began to negotiate further swapswith Iran. Two US companies, Chevron and Mobil who have oil concessionsin Kazakhstan and Turkmenistan applied to the Clinton administrationin May 1998 for a license to carry out swaps with Iran - a move thatcreated a major policy headache for Washington and would become a testcase for the future of US sanctions against Iran. 22Ultimately the security needed to build pipelines from Central Asia toSouth Asia rested on ending the Afghan civil war. 'The CARs have twoproblems with Afghanistan. One is fear and the other is opportunity,'the UN mediator for Afghanistan Lakhdar Brahimi told me. 'Fear is therealization by these new and still fragile countries that the Afghan conflictcannot be contained for ever within its borders. Either it is resolved or itwill spill over into the CARs. They want to avoid adventures of anykind from Kabul, be it Islamic fundamentalism, terrorism or drugs. Theopportunity is that as landlocked countries who want to break theirdependence on Russia, they are looking south for oil and gas pipelinesand communication routes. They want a government in Kabul which isresponsible and is a good neighbour. They want to open their borders notclose them,' Brahimi added. 23Despite declining oil prices and Russia's desperate economic plight, thebattle of wills between the USA and Russia will dominate future pipelinecompetition. Russia remains adamant in keeping the USA out of its