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The BTC pipeline long seemed a daunting project, rife with legal, political and financial complications. The problems began with choosing the route. To take oil out of the land-locked Caspian, the pipeline needed to cross several countries and avoid Iran, where America and some European companies are prohibited from doing business. There were also reasons to avoid Russia, because its state monopoly controls all pipelines traversing the country and because the United States wouldn’t support another Russian route. Strategically, the United States wants a new pipeline to bypass Russia so that if U.S.-Russian relations turn sour, the Russian government can’t completely halt the flow of Caspian oil to the United States; the U.S. also wants to help its ally, Turkey, where we have key military bases. But from the oil companies’ perspective, the circuitous route — from Baku, through Georgia, and ending at Turkey’s port of Ceyhan (thus the project’s name, Baku-Tbilisi-Ceyhan, or BTC) — was a gamble. It was far less efficient than crossing Iran or Russia, and ongoing unrest from Chechen fighters in Georgia added a high security cost. Russia, eager to maintain its monopoly on Caspian oil transport, opposed the deal, creating potential for more conflict in Georgia. And it’s never been clear that Azerbaijan’s oil supply is large enough to make these costs worthwhile. For years, then, the oil companies resisted this route as too great a risk. But the United States could make it worth their while. The U.S. holds the purse strings for key lenders, provides political risk insurance through its Overseas Private Investment Corporation (OPIC), and is one of the largest shareholders in the World Bank. By providing low-interest loans, these public institutions could lend the project what the oil companies wouldn’t. Indeed, BP’s president has said the consortium will need up to 70 percent of such “free public money” for the BTC pipeline to happen. The oil companies, with the help of Baker Botts, are now in the process of trying to get it.

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