Russia's Roosting Chickens

Image via Wikipedia

Much to my surprise, Brussels (but more likely Berlin) has been working tirelessly and quietly to remove the burden of Russian control over Europe’s (but actually Germany’s) severe dependence on gas from Siberia.

The European Union and Azerbaijan signed a deal Thursday in which Baku commits to supply Europe with "substantial volumes of gas," an agreement the EU said was an important step to reduce the bloc's dependence on deliveries from Russia.

Russia has used its energy resources as a weapon – not necessarily directly against Europe, but targeting Ukraine and Belarus. The strategy is aimed, and has largely succeeded, in assisting Moscow’s initial key foreign policy goals of regaining control of Ukraine and maintaining a thumb on Minsk. In doing so, however, Moscow alarmed Europe which needed to reduce gas imports from Russia before Russia began to use that same leverage to pressure the EU into ever more pro-Russian positions. The Kremlin’s energy gambit would allow it to loosen the support given by the EU to the Baltics, Poland and reduce other EU initiatives in the Caucuses and Central Asia. France, but not Germany, is immune to Russian pressure because of its huge nuclear energy facilities (a technology in which it is now the world leader).

The Russian move to bring Ukraine and the Caucuses back under its control was a key foreign policy goal of the Kremlin. The Russian Federation is a shell without Ukraine and the Caucuses is a buffer zone, like Belarus. The methods, however, were Putin’s. Without compunction, Putin’s Russia blatantly interfered in Ukrainian elections, invaded Georgia, signed virtually permanent military agreements with Armenia (outflanking Georgia and the West) and used disputes over gas pricing and transit fees with Ukraine to cut off gas supplies which happened to flow west. Europe, much to my surprise I admit, got the point and has started taking some action.

The faux democracy, single media environment of Russia built by Putin is now seeing some of its egg layers home to roost and one of them is named Nabucco.

Nabucco moves forward?

This is interesting news and a surprise (at least to me). The pipeline would not be finished until 2014 at the earliest, but the biggest question was who would be willing to fill it. None of the Central Asian countries would likely consider agreeing to do so at this time for several reasons, it seems. The first is that they would be unwilling to irritate Russia as the pipeline is specifically designed to avoid Russia and lessen European dependence on Russian gas transit and supplies. The second reason is that it is a long way to go - crossing Iran and the mountains to Turkey - while the Caspian is a huge barrier to piping gas from Central Asia.

From a geopolitical standpoint, this announcement must be a blow to Baku which has watched Turkish negotiations with Armenia with some degree of concern. Nabucco crossing the Caspian would have needed to cross Azerbaijan, giving it some degree of leverage with Turkey and Turkey has been very cautious in dealing with Russia which is calling the shots in the South Caucuses. Iraq eliminates that problem for Turkey and gives it more room to maneuver with Azerbaijan, Armenia and Russia.

Russian Flexibility in Defense of Empire

Russia, through its foreign policy wing, Gazprom, has changed its position on penalties imposed against Ukraine for not purchasing the contractual amount of gas. Now it will impose the penalties according to Kommersant Ukraina (sorry, no link). There is nothing wrong with this based on contractual law - except for the glaring fact Gazprom and Russian Prime Minister Vladimir Putin had said in March that Russia would not demand penalties connected to Ukraine’s import shortages.

The fact that Putin and Russian government are untrustworthy and, basically, liars, is secondary to the use of the oil/gas weapon to recreate the Soviet Union. But Russian proclivity for outright lies should be noted.

Georgia, Moldova, Turkmenistan and Armenia

Except for Turkmenistan, the donor community has poured tens of millions of dollars into Georgia, Moldova and Armenia. For all the money, Moldova remains an economic basket case and Georgia is in entropy mode. Armenia may move away from the downward spiral it has been experiencing since the end of the 1993 war with Azerbaijan - but it won't have anything to do with the development aid it has received over those years. It will be because of changes in the geo-political make-up of the region, the rise of Turkey and a resurgent Russia intent on re-creating the Soviet Union.

Moldova is an interesting case because I recall a heavy emphasis - at the expense of economic and business support - on civil society programs. This was particularly the case with USAID whose local mission was in thrall to civil society. The problem with that is a poor household does not really care about civil society if it has little or no income or food. What is also surprising is for all intents and purposes, the current government won the election by a few points. They call themselves "communist" but in reality they are not. They simply have an un-reformed soviet style system - despite all that foreign aid - which lives up to its previous inefficiency. Moldova's biggest and unrecoverable mistake was seperating from Romania. The second problem is the Transdneister, that sliver of illegal, trafficking, blackmarket and gun-running dirt with its own unrecognized passport and thousands of Russian troops to protect it from Moldova, of which it is a part. The Transdneister problem is what keeps Moldova tied to Russia. No development aid that does not take that into consideration will succeed. Nor will it succeed without strong political will within the Moldovan government to change. That may require a change in the system.


Georgia - well, that's a different case. It is very clear that Saakashvili must go. It may be that his attempt to assert central government control over the break-away regions of Abkhazia and South Ossetia was partly due to his promise to the more nationalistic parties in Georgia to do so and thereby win the last election, but now comes the blow-back. It was never really important for Georgia to regain control of those two regions over which it has had no effective control for a decade. Even if Russia has overreached and concentrated the attention of Turkey and Azerbaijan on its newly imperial ambitions, Georgia is now in danger of disintegration as long as Saakashvili remains. If Georgia loses Batumi, then it loses its oil transit revenues. A graceful way out is needed and the opposition must come up with a plan for moving forward economically, socially and politically and not just have the removal of Saakashvili as its goal.

Turkmenistan has now accused Russia, through Gazprom, of blowing up its gas pipeline on the Uzbek border this week. That may well be true. It will be interesting to see how the gas war develops because Russia is determined to gain almost total control of gas resources either through production or lines. This is the real great game developing in the western areas of Central Asia.

Armenia - Turkey Accord

Armenia and Turkey have been talking. There appears to be a chance that Turkey will open its borders. Let's make no mistake - this would open up huge market possibilities to the impoverished, Russian ally in the south Caucuses. Such a move would also play well for Turkey with the EU.

Open borders for Armenia could allow a larger portion of the earmarked US development aid funds to be utilized in implementing a variety of interventions aimed to develop Armenian trade and business ventures.

The benefits of trade across the border with Turkey, avoidance of Georgian customs corruption and the effective targeting of development aid to support private sector growth could bring about significant change in Armenia. The end to isolation would likely have an immediate positive impact on the rampant corruption in the government and public services that exists at every level.

Much depends on the extent of any agreement with Turkey and the resistance to such a move by Azerbaijan.

Hurriyet News reported today that Azeri Foreign Minister Elmar Mamedyarov warned that "If the border is opened before the withdrawal of Armenian troops from the occupied territories of Azerbaijan, it would run counter to Azerbaijan's national interests".

This message was likely meant as much of a warning to Armenia as to Ankara. However, it also may represent an opening if it is not meant to only refer to Ngorno-Kharabakh. An offer by Armenia to withdraw from the other occupied territories could move the peace process forward. This may be the best time to start serious talks.

The other issue is Azerbaijan's position as independent of Russia, which might change if it felt that Turkey was about to abandon Baku. They have already signed a memorandum of understanding with Gazprom (Moscow's real foreign affairs arm) on natural gas transport through Russian pipes at market prices. Finalizing such an agreement would kill the Nabucco project which is intended to avoid Russia and bring natural gas to Europe via Turkey. So much for energy independence.

Finally, sorry Representative Kirk (R.CA). The Armenian Genocide bill will likely not pass now - Turkey, geo-politics, energy and peace are more important - and, what is the color of the sky on your planet? The failure of this bill will not cost the Democrats the House in 2010.

Chess with Russia

According to UNIAN (via AFP in Moscow - no link) Russia cancelled scheduled talks with Ukraine in light of the agreement reached by Ukraine with the EU to upgrade its gas distribution system. President Medvedev and Prime Minister Putin - in a now familiar double-team announcement, basically told the EU that Ukraine and its gas (which flows to Europe) is their responsibility. Putin ill-disguised threat of 'reviewing' Russia's relationship with the EU unless they are included in discussing this turn of events is also now becoming very familiar. Of course, the South Stream pipeline project has nothing to do with this and Russia also respects the independence of its neighbors.


What remains to be seen is whether the EU actually can fund the rehabilitation of the pipelines and, more importantly, whether the Germans and French are willing to provide this type of development aid in the face of Russian threats. Russia has a window of opportunity really flex its energy muscle - and events like this clearly upset the Kremlin. If the EU doesn't follow through and Vice President Biden's rejection of spheres of influence is ignored by the 'reset button' - Ukraine can look forward to a lot less maneuvering room with its resurgent neighbor.


I'm off to Moscow at the end of May and will get some additional views on the on-going issues between Russia's near-abroad and Russia. By that time, of course, President Yuschenko will be in the process of being impeached.