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 | | Russia's Control of the Caucasus Switching from Methods of Another Time to 'Modern' Economic Levers. But Does it Have the Means |
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| By Richard Rousseau |
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The funeral of communism will last for thirty years, prophesied the well-known French historian Francois Furet in 1995. "The funeral procession will be accompanied by an immense crowd", he added, "and there will be much weeping. Even young people will join the cortege, trying here and there to give it the air of a rebirth." We haven't seen much weeping yet, only nostalgia of the social security communism procured during its 'developed socialism' phase under Brezhnev. But Furet's prediction of a rebirth of communism seems accurate in one of its corollary: imperialism. Are President Putin and members of his administration among these young people set on a course to give a rebirth, not to communism, but to Russian imperialism?
In 2001, just a few months after he took office, Putin made no secret of Russia's weaknesses. In fact, Putin listed "pragmatism" as the second of three principles of Russian foreign policy (The others were "national interests" and "economic efficiency.") The rhetoric of the Boris Yeltsin days had really disappeared. This was a different Russia, more realistic and therefore more credible.
In September 2003, in a remarks after a meeting of the Commonwealth of Independent States, the grouping of former Soviet republics, Putin said: "The Soviet Union was a very complicated page in the history of our people," adding "that the train has left." In the past and to audiences from the former republics, Putin has sought to ease fears about Russia having designs on rebuilding the old empire.
But in last February, he spoke in a much different tone, appearing to play to Russian nationalism. He used a campaign speech, in a nationally televised speech to about 300 campaign workers gathered at Moscow State University, to declare the demise of the Soviet Union a "national tragedy on enormous scale." It appeared to be his strongest-ever lament of the collapse of the Soviet empire. Putin, a former agent of the Soviet KGB spy agency, has praised aspects of the Soviet Union in the past but never so robustly nor in such an important political setting. "The breakup of the Soviet Union is a national tragedy on enormous scale," from which "only the elites and nationalists of republics gained," Putin said. The President's language was sure to send a chill through the 14 other former Soviet republics that have been independent from Moscow rule for more than a decade.
Return On the Scene
To a casual observer three years ago, it looked as if the September 11th attacks had made Putin decide to join the Europe and America in the in the battle against global terrorism. Now, it looks as if he has changed his mind again. Russia seems to have shifted recently: it has been cool about an invasion of Iraq, uncomfortably warm towards America's axis-of-evil countries, and ever more aggressive towards Georgia, where some Chechen rebels, supposedly, seek refuge - Putin, at one point, has even threatened to bomb Georgia's Pankisi Gorge. In support of this turnaround in Russian's foreign policy, we can also mention the creation of Russian air base in Kyrghyzstan, the scandal in Lithuania around President Paksas's connections with the 'Russian mafia', the building of a dam in the Azov sea, the one-sided (by circumventing the OSCE) attempt from Moscow to regulate the situation in Moldavia and, Russia's strong stance over the rights of the Russian-speaking minorities in the Baltics and the insistence on a quick solution to the transit of goods to and from Russia's Kaliningrad exclave. Russia's concerns over Russian-speaking minorities in the Baltics and the transit of goods to and from Russia's Kaliningrad exclave Some Kremlin-watchers believe that Putin's stand up for Russia's interests is related to the pressure from the Kremlin and the Duma conservatives.
Whatever the reason for the reorientation of Russia's foreign policy, it seems that the more Putin's regime is anchored to Russian political institutions and society, the more it returns to the past, becoming not only authoritarian ("managed democracy"), but also an expansionist power. The 'honeymoon' between Russia and America lasted about two years. Not that Moscow and Washington have recently become enemies, but there are a lot of indications that the Kremlin, counting on an invigorated economy, will not easily let former Soviet republics slip from its grip to the benefit of US interests in the 'near abroad' region.
This change has materialized in a "Putin doctrine" that is seemingly new additions to the "National Security Concept" adopted in January 2000 shortly after Boris Yeltsin handed over his presidential powers to Putin. In October 2003, Russian Defense Minister Sergei Ivanov declared that Russia reserves the right to intervene militarily within the Commonwealth of Independent States (CIS) in order to settle disputes that cannot be solved through negotiation. At the same press conference in Yekaterinburg that that mark the visit of German Chancellor Gerhard Schroeder, Putin added that the pipelines carrying oil and natural gas to the West were built by the Soviet Union and it is Russia's prerogative to maintain them in order to protect its national interests, "even those parts of the system that are beyond Russia's borders." The "Putin Doctrine" codifies what some observers might consider Russian claims to hegemony in the CIS and an unveiled threat to Georgia. The slogan "liberal empire", crafted by the 'liberal' reformer Anatoly Chubais, is another way to state Russia's strategic policy in response to the growing possibilities and demands of Russian capitalists and the burgeoning of Russian nationalism.
This 'accompaniment' to the "National Security Concept" explains in part the series of recent moves to reassert Kremlin's control over what it considers to be Russia's sphere of influence. Russian officials argue that the newly revised Putin Doctrine will bring greater stability to the region; and stability is the name of the game concerning energy supplies to Western Europe, which currently depends on Russia for 28 percent of its gas supplies, and potentially to the United States. Schroeder's Germany, which is dependent on Russia for 12 percent of its natural gas and 18 percent of its oil, is vitally interested that the pipelines and stability be maintained. The stability argument implies that Russia is positioning itself to be the guarantor of regional stability throughout the CIS.
Business Instead of Tanks and Troops
With the collapse of the Soviet Union Eurasia and the Caucasus has become a region of diversified international interests, different civilisations and diverging paths of political development. Georgia, Azerbaijan and Armenia's geopolitical importance, both as a 'transit states' for the export of Caspian hydrocarbons and as a frontline state in the global "war on terrorism", remains constant, although there current internal fragility could ultimately negate that strategic value. The Caucasus is then a crossroads for more than energy pipelines and the international community has a vested interest in its security, stability, and prosperity. Russian-American cooperation on energy and broader issues will continue in the Caucasus, but the content and the quality of the relationship will really depend on how Russia behaves in these countries. One thing for sure is that the evolving identity of these three post-Soviet republics will lead to new relations and it will be less and less relevant to consider Russian and the Caucasus synonymous as during the soviet empire.
For Europeans and Americans, the access to Central and East Asia on land is conditioned by some transport infrastructure and military instalments in one or some of the Caucasus countries. For Russia and regional powers, these countries are significant militarily and economically since they are members of the Commonwealth of the Independent States (CIS) and were during more than a hundred years subject of the Russian tsarist Empire.
In the present day, Russia, as well as China, India, Iran and Turkey are making concerted moves to gain influence in Central Asia and the Caucasus to stem growing U.S. and EU influence in the region. There is an evolving alliance, in particular between Russia, China, and India. These countries are all nuclear powers, all grappling with Islamic extremism and all deeply concerned about what they see as the unilateralism of the United States and its doctrine of pre-emption through the use of massive forces and, if necessary, nuclear weapons. It is important to note that Moscow signed a treaty of friendship with Beijing in July 2001. Prior to this, Russia, China, and four Central Asian states -- Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan -- created the Shanghai Cooperation Organization to facilitate multilateral efforts at stemming Islamic fundamentalism and to promote regional economic development. All this pointed to a profound geopolitical transformation for the Caucasus, Central Asia, Russia and China, with Moscow and Beijing as the decision makers in the region. The main question is then whether Russia will continue to use the levers that it has in the past.
Since Vladimir Putin came to power in March 2000, there are more and more examples of Russian economic influence that reaches across the Caucasus and the rest of the former Soviet Union. There are little doubts that Putin has decided to strengthen influence over South Caucasus states and is replacing Russia's military levers with economic structures. Russia is using pipelines and power lines instead of tanks and troops.
For example, Russia's state electric company, Unified energy System (UES), has bought last year a controlling stake in the main Georgian utility distributor, Telasi, from the U.S. power company AES. Telasi is now a Russian-owned company that provides Tbilisi, a city of 1.3 million people, with electricity, a precious commodity in a country where blackouts are a part of daily life. Georgian politicians protested that the deal would give Russia a powerful political lever over their Caucasus Mountain country. UES chief Anatoly Chubais flew to Georgia in August 03 and sought to reassure authorities about the Telasi purchase, saying the company had no political goals and Georgia's electricity supplies would be secure. Russia might have change its style in dealing with Caucasus states but critics, notably in Georgia, questioned the company's motives for buying a utility company whose chances of making a profit are diminished by decrepit equipment, corruption, poverty and an habit from the Georgian clients of not paying the bills. There is no secret to UES' activities abroad. It's practically part of the Russian state apparatus, and naturally the policy it pursues is state policy. UES, which exports power to countries from Norway to China, says in its statutes that its foreign business is coordinated with the Russian government and conducted in the interests of its shareholders, the largest of which is the state. UES and other Russian companies with close ties to the government are simply trying to acquire property in former Soviet republics and then use that property as a political lever to influence the situation in those countries to Russia's benefit. It allows Moscow to influence personnel and policy decisions in those countries, shaping their future in line with its interests.
In January 2003, during President Kocharian visit to Moscow, the Armenian government agreed to cede financial management of the Medzador nuclear-power plant to the Russian power utility Unified Energy Systems (EES) in exchange for paying off Armenia's $32 million debt to the nuclear-fuel supplier TVEL and covering the purchase for $8 million of a new consignment of nuclear fuel. From the proceeds of its sales of energy, Medzamor will in turn repay EES.
In the gas sector, the state gas monopoly, Gazprom, signed a framework deal with Georgia this year whose terms are vague, but which seems to give Gazprom the right to expand Georgia's gas network. Russia already controlled nearly all natural-gas supplies to Georgia. This move means that Russia will try to use Georgia as an export route for its own gas to Turkey, getting there before the trans-Caucasian gas pipeline which is not expected to be built before 2006. With the Baku-Tbilisi-Ceyhan (TBC) oil pipeline project, Georgia, on its part, hopes a U.S.-supported natural-gas pipeline from the Caspian Sea to Turkey will ease its dependence on Russia.
In the past, Russia has cut off gas supplies in winter: theoretically for non-payment, but often apparently for political ends. Most notably, Russia has put the heat (or rather the cold) on former Georgian President Shevardnadze when rebels from Russia's war-torn republic of Chechnya have used Georgia's Pankisi Gorge, across the border from Russia, as a hiding place. In February, Russia's state-connected Gazprom briefly halted natural-gas supplies to Belarus during a dispute over efforts to gain control of Belarusian industrial enterprises including the pipeline company that relays Russian gas to Europe. In December, the Russian state-owned oil-pipeline monopoly, Transneft, stopped deliveries to the Baltic Sea port of Ventspils, Latvia. Latvian officials said Moscow was arm-twisting in an effort to buy the Latvian government's stake in the company that loads oil onto ships bound for the West.
In the Caucasus, Russia's economic activity is a reaction to increasing U.S. and European influence in the region. There's no question of returning these countries to Russia or to some sort of Soviet Union. But to bind them more closely to Russia this is a completely realistic policy. A question arises then: is Russia capable of conducting a great economic power policy in the Caucasus?
Do the Ends Meet the Means?
Despite these efforts toward the strengthening of its economic presence in the Caucasus, Russia has lost its position as the centre of gravity in the region. It is also unlikely that it will be able to reassert itself as a dominant geopolitical power. Simply, Russia has lost the economic resources to attract this region in its sole sphere of influence. It will have to realize, the sooner the better, that it is living, after the communist debacle, in a process of marginalization -- and possibly disintegration - in the world affairs.
Russia's geopolitical interests are too dispersed considering its means and the international community has become too globalized for the dominance option. Russia has not the capability to re-emerge as a major power in a multipolar world. For example, the Commonwealth of Independent States (CIS) has not serve as an instrument for future Russian integration and ascendancy. Instead, the historical role of the CIS has been to keep the nostalgia for a new Russian empire at bay by providing the illusion of reintegration. The reality is that member states of the CIS, and particularly Caucasus states with the exception of Armenia, have become increasingly more independent.
But Washington as well, the new superpower, is unable to settle the conflicts that broke out in the post-Soviet space on its own and must therefore rely on Russia. America has the option to notably delegate its functions to Russia with regard to the settlement of the most serious conflicts that exist in the post-Soviet space. This of course goes for the conflict in Georgia with Abkhazia, Adjaria and South Ossetia and for the Transdniester dispute in Moldova. Today it is obvious that these conflicts cannot be sorted out without external intervention, that none of them can be settled on its own. Russia has to act in coordination with the U.S. within a global framework that will meet America's interests and not contradict them.
There are strong indications that Russia is becoming a 'petrostate'. This not necessarily an advantage as experience shows. With relatively few exceptions, oil revenues in the developing world have massively enlarged the scope of the state and its bureaucracies. This is what is happening now in Russia. Capitalism was supposed to sweep away the vast ranks of communist apparatchiki. Statistics show that the number of Russian bureaucrats has doubled to 1.25 million within a decade. The privileges enjoyed by these civil servants -- including the use of an estimated 600,000 government cars -- are said to cost about $2.6 bn a year. Yet, at his inauguration in 2000, President Putin has declared war on the expanding bureaucracy. It is obvious now that he lost it. Figures show there are now 1.25 million officials in local and federal government, not including army, law enforcement or emergency services personnel. In 1990 there were 663,000. During the 2004 presidential election, he reaffirmed that the most important reform will be to establish a more effective administration and institutions, he says.
These problems apart, there will be enormous revenues coming onto Russia's state purse in the years to come. Where these petrodollars will be invested? From declarations made in the March presidential election, analysts have conjectured that the machine-building sector would be the most important beneficiary of these petrodollars. The idea being to attempt an enlargement of this sector through exports. On the basis of this logic, it becomes clear that Putin wants to conquer the world market of armaments, a sector that brings huge foreign currencies. Numerous visits of Russian officials to China reflect the continued importance of the arms trade for Russia. China has been a faithful consumer of Russian military equipment, and accounts for half of Russia's arms sales abroad, buying, for example, 73 Sukhoi fighter jets in the past three years alone. China is a key partner for Russia, whose arms complex largely depends on export sales for its survival. Without Chinese arms-procurement orders, probably one-third of Russia's military complex wouldn't have survived into the third millennium. Factories would have just closed down. They only made it through thanks to China. So for Russia, the machine-building sector, mostly arms orders, is extremely important but the hard fact is that it is not competitive.
Russia's economic potentialities, it is true, are fabulous. But we hear this phrase about Russia since as far back as the 17th century. We should not forget that before exploiting these potentialities, Russia has a gigantic task of rebuilding its infrastructures. Compared to post-Communists states like Poland, the Czech Republic or Hungary, Russia's investments in the renewal of its infrastructures are very low. It follows that the gap between these countries and Russia is rapidly increasing, the more so after the accession of Eastern European countries into the European Union. The sector more at the risk of decay is the one that is the source of Russian's economy recent successes and the pillar of future development. Indeed, the energy sector, without colossal investments in the replacement of old and sometimes decrepit extracting installations, will enter soon in a phase of fast and prolonged decline. The repair and the replacement of the Russian power stations will require investments of at least $7 billion during the next 15 years. In the industry of gas and oil, billions will have also to be invested. Wells currently in operation are extracting less and less gas and oil. The cost associated with digging a new oil well amounts to 8 or 10 billion dollars. Dozens of operational wells are on a standby for a lack of financial resources. In the telecommunication industry, Russia needs $9 billion of investments to transform old current telephone lines into digital ones. To be modernized, the system of the long-distance calls needs $6.5 billion. Russia devotes only $500 million per year to it. Examples like these could be added on many pages.
Tedo Djaparidze, Georgian ambassador in Washington during eight years, suggested during a meeting in Moscow in last January that "Russia should choose what's in its best interests in its relations with Georgia. To have tanks or many banks? The answer is, I believe, to have banks."
Richard Rousseau
Associate researcher, Ecole des hautes etudes en sciences sociales, Paris, France. Presently
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