Books on Russia
Update No: 333 (25/09/08)
Turmoil and tumult
When President Mikhail Saakashvili of Georgia ordered his troops into South
Ossetia on August 7, he started something much bigger than he realised. A strong
reaction by the Kremlin was inevitable. Did he act on prompting from certain
people in the upper echelons of some Western security organisation?
'A new cold war' is an exaggeration to describe the situation, but a distinctly
cooler climate now prevails in Russia's relations with the West, especially the
NATO denies responsibility for war in Georgia
Was he put up to it by the Americans, or rather some unidentified figure in the
Western alliance, promising support? It would have been a major miscalculation
if he did believe it. The Caucasus is not the remit of the West, but
NATO has denied provoking August's five-day conflict between Russia and Georgia,
a spokesman for the alliance said on September 18, after Russian President
Dmitry Medvedev accused it of sparking the conflict. Medvedev had said NATO
"provoked the conflict" between Russia and Georgia last month, adding
that Russia was "being pushed... behind an Iron Curtain. I would like to
underline again that this is not our path. There is no sense for us in returning
to the past."
NATO Secretary General Jaap de Hoop Scheffer meanwhile pledged "full
solidarity" with the ex-Soviet republic, following an informal meeting with
the 26-nation bloc's defence ministers in London. De Hoop Scheffer told
reporters at a press conference in London that "NATO is in full solidarity
... with the Georgian people and with the Georgian government. We have an
intensive partnership, an intensive dialogue, an intensive high-level political
engagement with Georgia," he added.
Asked for his response to Medvedev's accusations earlier, NATO spokesman James
Appathurai told AFP: "There is nothing provocative about supporting
Georgia's democratic development, nor anything provocative in helping them meet
their aspirations to come closer to the Euro-Atlantic community."
Georgian efforts to become part of NATO have infuriated Russia, which objects to
the prospect of its old Cold War foe extending to its borders.
In a separate development likely to anger Moscow, US Defence Secretary Robert
Gates and his Czech counterpart signed an agreement clearing the way for
stationing US forces to operate a missile defence radar in the Czech Republic.
This is planned to be in tandem with a defence system in Poland. The Kremlin
threatens to station nuclear weapons against the two states, its former allies
in the Warsaw Pact.
The brief Georgia-Russia war overshadowed the talks, which were originally
intended to focus on the alliance's continuing transformation to a more flexible
regional security bloc, and the conflict has chilled Russia's relations with the
West to a degree not seen since the Cold War.
On September 18, British Prime Minister Gordon Brown said, after talks with
visiting Georgian Prime Minister Lado Gurgenidze, Britain was in "full
support of the territorial integrity of Georgia and we will be giving financial
and economic support to Georgia, and urging other countries to do so. We will be
working with our European partners to ensure that there is sufficient support
for the reconstruction of Georgia," he added.
Both Scheffer and Gates spoke cautiously of how to respond to Russia following
the conflict. Scheffer said he foresaw "no U-turn in NATO policy"
despite uncertainty about Russian intentions and said the Georgia conflict would
not be resolved "if we seek to punish Russia".
Gates, meanwhile, urged NATO to avoid provocation in its response to Russia,
adding he thought concern among members on the issue "has more to do with
pressure and intimidation than it does any prospect of real military
Brown meanwhile told Sky News television that supporting Georgian and Ukrainian
membership to NATO was "the right thing to do." He added: "If a
sovereign country, free to make its own decisions, wishes to be part of a
democratic group that has quite clear principles attached to its membership then
we should be prepared to look at that."
OSCE banned by Russia
Attempts to have military monitors of the Organisation for Security and
Cooperation in Europe (OSCE) placed inside South Ossetia, failed on September 18
when Moscow flatly said no.
The EU under the leadership of President Nicolas Sarkozy of France has
negotiated the dispatch of 200 EU monitors. They will be stationed in the
Russian defined 'buffer zone' outside the two breakaway regions, Abkhazia and
South Ossetia, which 8,000 Russian troops are garrisoning. The Kremlin
infinitely prefers dealing with continental Western Europeans to the US or the
UK. When Condoleezza Rice says Russia is facing pariah status, she is wrong as
regards the EU. She is speaking for the US State department, but not for much
longer. Any US president with an ounce of sense is going to forge a new
relationship with Russia next year.
Gazprom to the fore
The point is that Europe needs Russian energy far more than the US. One of the
main winners in the Russian- Georgian war in South Ossetia was Gazprom. And not
only in economic terms, but also in geopolitical terms. That does not mean that
Russia's biggest state company was involved in unleashing the war or, indeed,
took part in it in any way. They had nothing to do with it. But the fact is that
the war was a severe blow against Gazprom's competitors, or more specifically,
the rival infrastructure projects for delivering gas to Europe.
It is through Georgia that the so- called "fourth corridor" runs, by
which hydrocarbons and especially natural gas reach the EU countries. (The first
corridor is from Russia, the second is from Norway, and the third is from
The biggest gas pipeline runs through Georgia: Baku-Tbilisi- Erzurum
(Turkey), from where the gas continues towards southern Europe. With the growth
in the volume of extraction in Azerbaijan, the pipeline's capacity could rise
from today's 6 billion cubic meters a year to 20 billion by 2014. Even if it did
not stop deliveries, the war, first of all, pushed gas prices up, and second, it
was bound to influence plans for the expansion of the "fourth
True, the conclusions from the war could be twofold. The BBC claims that the
Russian-Georgian war could be interpreted by the gas and oil extracting
countries as a show of strong pressure by Moscow, pressure that could also be
turned against them, which might make them abandon plans to support non-Russian
- essentially, anti- Russian - projects for the delivery of hydrocarbons to
Europe. But exactly the opposite conclusion is also possible. For the EU, the
main value of the Baku-Tbilisi-Erzurum pipeline is that it has nothing to do
with Russia, and therefore Gazprom. There could be a boom in non-Russian
projects with the support of the Europeans. Germany, for instance, has already
sounded out the subject of pipelines as one of the priorities in postwar talks.
Berlin is threatening Moscow that "without the help of the EU it will be
difficult for Russia to modernize the gas infrastructure." The same
arguments also apply to the Georgian transit oil pipelines, such as
Baku-Tbilisi-Ceyhan, for instance.
Wider effects on the economy
Russia's financial markets already lost foreign confidence earlier this year
over disagreements between BP executives and Russian executives on how to invest
profits from the jointly owned TNK-BP oil company. Just after the Russia-Georgia
crisis, the (London) Telegraph reported that the unexpected costs of the war had
an instant effect on Russian markets, that Russia's economy suffered from
chronic inflation, and that falling crude prices are threatening a major trade
deficit. If Russia decides to embrace isolation in this kind of insecure global
environment, its leaders must understand that it is the general population that
will face economic and social hardship as a result.
The drop by 37% in world oil prices from a high of $147 per barrel has been the
prime reason for economic slowdown and a massive fall in the Russian markets by
57%. The government has poured liquidity into them to try and correct the
situation. But the impact of the August war has not helped to restore investor
confidence, any more than BP's and Shell's difficulties with their Russian jvs.
But if investors don't return and oil prices fall further in the wake of the
global financial crisis in the third week of September, the Russian boom may
begin to look like a short-lived miracle.