Counter-order comrades: Yamal first

As for December 2008, the financial crisis has forced a reconsideration of Gazprom´s Artic sea projects. The plummeted oil price is making unfeasible the complex extraction and piping facilities that were just in September due and ready for approval. The list goes from the Barents sea projects (Shtokman, Prirazlomnoe, Nucula) to the terrestrial explorations on the continent. Credit crunch means that investments must be workable at favourable conditions for Gazprom in terms of technology used, location, entity f the investment. The optimum seems to be not to rely on international partners. Let´s take a rough look at the two:

Shtokman field – Barents sea

Located north to the Kola Peninsula, it is deemed to have an enormous potential, as the planned 72 wells testify. Alas, a 50-60 USD oil price would make reason of it, and currently the price is below 40 USD pro barrel. The offshore nature of the drilling and the current Gazprom doldrums are handicaps that must be rightly explained to the Shtokman partners Total and StatOilHydro. According to Vedemosti “with estimated costs per well amounting to 100 million USD and leasing of equipment costing about 400.000 USD per day [...] Shtokman drilling costs alone to as much as 5.6-7.2 billion USD. The first field is expected to cost 15 Billion USD, 70% of which will be lended money, according to Shtokman Development Company Yuri Komarov.

Bovanenkovo field - Yamal peninsula

It is an onshore field east in north-Western Siberia. It is deemed to be a rich field (115 billion cubic meters), the first of a series of drilling that will eventually reach 250 billion cubic meters, according to estimates. The project will cost 8 Billion USD, and is comprehensive of a pipeline facility.

Although no precedence has been given in the latest Company meeting on December 23^rd, Gazprom´s choice might well be for Yamal. According to the Gazprom corporate site “gas transportation priorities are: construction of the Bovanenkovo – Ukhta, Ukhta – Torzhok trunkline systems, the Gryazovets – Vyborg, Pochinki – Gryazovets, Murmansk – Volkhov gas pipelines, and the SRTO – Torzhok gas trunkline.” This means Yamal first. The second in line, the Gryazovets-Vyborg pipeline, is to serve the Nord Stream project. It is designed to link the Yuzhno-Russkoye field to the Vyborg facility and then to Nord Stream. However recent technological developments and sudden greed for cash seem to put on hold the environment-problematic underwater pipeline project and push for a LNG facility in Kaliningrad, due-completion in 2011.

CSTO updates – singling out a Central Asian reaction force

CSTO is a collective military organization that for long had been paired with SCO as Central Asia Security force. Talks of merging the two organizations as well as references of joint drills were made in the past to ensure the perception of an unified and confident Continental shelf. The Georgian crisis in August 2008 proved to be a cold shower in these aspects. It prompted Russia and some CIS states to address the question of factual involvement and military response.

SCO is taking a more diplomatic and political configuration, a sort of a Council rather than an Army. This finds it reason in the voluntary nature of the SCO, an organization that brings Central Asia diversity at the same table, cools border frictions, prevent smuggling and separatism but falls short of collective intervention mechanisms like in NATO (the same mechanism that would have complicated things had Georgia joined the organization afore the August crisis). SCO proved ineffective in its initial equidistant approach towards the Georgian conflict, remaining distant and speculative in front of a quickening of the pace of the events in Tskhinvali.

Little wonder that recently Russia moved with decision to power CSTO as an effective rapid action force by pushing for an increase in investments in weaponry, by calling for an effective deployment of an initial force of 5.000 and by setting zones of responsibility. CSTO Secretary

Gen. Bordyuzha ambitiously describes a 10 Battalions reaction force, an unified air defence system and a busy military drills agenda. To complete the picture, there would be an equal share of the financial burden and a negotiated supply of russian weapons on favourable conditions.

Exit GUUAM, enter..?

CSTO buildup is causing a counter-action within european US-allies. It prompted Poland, Ukraine and Lithuania in mid November to consider a Joint peacekeeping force to be formed by 2011. It is a strategic re-array given the alleged GUUAM lethargy, if not demise. The GUUAM organization, that used to unite in a common securty effort Georgia, Uzbekistan, Ukraine, Azerbajan and Moldiva is presently experiencing difficulties after the drop-off of Uzbekistan, the Georgian crisis and current Moldavian appeasement with Russia to solve the Transdniestrian problem. The new, strictly European geometry of this purported military organization implies also Azerbaijan to be increasingly at ease with its Russian neighbour as the recent Nagorno Karbakh peace talks substantiates.

Russia to push new European security deal at UN

New York, Sep 23 (RIA Novosti) Russian Foreign Minister Sergei Lavrov will promote the idea of a new European security treaty this week when he attends the UN General Assembly.

The General Assembly's annual ministerial session opens Tuesday amid uncertainty over the global economic outlook, continuing violence in the Middle East, concerns over Iran's nuclear programme and the deterioration of relations between Russia and the West over South Ossetia and Abkhazia.

Apart from a general meeting with foreign ministers from the 27-member European Union (EU) to discuss Russia-EU relations, Lavrov will hold about a dozen bilateral meetings with the presidents of Cyprus and Philippines, and his counterparts from Albania, Norway, Bolivia, Spain, Pakistan, Zimbabwe and Syria.

Prior to his arrival in New York, the Russian foreign minister made a stopover Monday in Ireland where he met with Irish Prime Minister Brian Cowen and Foreign Minister Michael Martin to discuss Russia-EU relations and European security.

Following talks with his Irish counterpart, Lavrov said Moscow hoped that the United States and Canada would take part in the preparation of a new European security treaty.

'Russia's stance is that the United States and Canada should become part of this process,' he said.

The idea of holding an all-European summit and drawing up a new legally binding European security treaty was put forward by Russian President Dmitry Medvedev in June.

Medvedev said at the time that all European states should be party to such a treaty 'not as states associated into blocs and alliances, but as sovereign entities.'

He said any new security arrangements should be based on 'pure' national interests, not skewed by ideological motives, while 'organizations operating in the Euro-Atlantic region' should also have the opportunity to join.

Moscow has strongly opposed the possible deployment by the United States of 10 interceptor missiles in Poland and a radar station in the Czech Republic as a threat to its security and nuclear deterrence.

The interceptors and the radar are parts of a US missile defence system against possible strikes from what Washington calls 'rogue states'.

Time to go, buddy....

The Power change in Tbilisi explained with savoir-faire. Battered Georgia - Time running out for Saakashvili

The main collateral damage from Georgia’s failed military operation, apart from the loss of Abkhazia and South Ossetia for the foreseeable future, is to the prospects for the President’s

By Nina Bachkatov In the six weeks since the repulse of Georgia’s incursion into South Ossetia, President Saakashvili has been able to keep a high profile, thanks to the numerous visits to Tbilisi by Western leaders and the attention of the ‘international community’. Innumerable photo opportunities and joint press conferences have given him the feeling of strong foreign support. There have also been street demonstrations in support of national unity and of solidarity with the president. But both things are fragile, and Saakashvili is living on borrowed time. At first there were moments of real unity in face of adversity, thanks to the country’s strong national identity and a deep resolve that, as the President loves to repeat, ‘not a square centimetre of our territory can be given away’. But in the Caucasus, it is vae victis- a warrior is respected as long as he wins. And Saakashvili has lost. He has now two kinds of critics of the military operation: those who believe it was stupid to attack and those who believe he was foolish to wait so long before using force to recover the secessionist statelets. In addition he is criticised for having misunderstood what kind of support he might receive from the West and for having misled the population. (Russians who have seen records of the interrogation of Georgian prisoners say prisoners believed that NATO would assist them; some thought that Georgia was already a NATO member; and other believed there was to have been an operation by Turkish special forces to secure the Roki tunnel to block Russian reinforcements.) In addition there are those who say that by his gamble he has sacrificed Georgians’ relations with Russians, which were always good at personal level, for the uncertainty of Western integration. Displaced persons Then, again, there are those who mourn dead relatives or have been obliged to shelter displaced persons. And, finally, there are the displaced people themselves, some of whom will never go back; people who from Day One have accused the president of destroying any hope of continued secular coexistence with Ossetian – not only by launching the military operation but also, earlier, by using their villages to shell Ossetian settlements, and, earlier still, by creating an artificial ‘Ossetian administration’. Displaced persons have been a political force to contend with since the massive expulsion of Georgians from Abkhazia in 1993. And the emotion over the new wave of refugees will not offset the scandal over the way the earlier ones have been treated in Georgia, including the expulsion of dozens of families who were living in a run-down Tbilisi hotel to make way for it luxurious refurbishment. The question is: who will organise the political opposition? For the first weeks, the motto was ‘national unity’. Any sign of attack against the person of the president was tantamount to treason. Saakashvili skilfully used ‘Unity against Russia’, depicted as the assailant, as a rallying cry. There could be no question of the President ‘resigning in face of Russian ultimatums’. But the war was his personal decision, taken without consultation (Saakashvili himself has said that he gave orders for the attack on his mobile telephone). So the defeat, too, is a personal one. ‘Heroes’ let down The first criticisms were quick to come, not only over the decision to attack but also over the way it was done. Within days Georgian experts were portraying simple soldiers as heroes obliged to relinquish their positions due to lack of preparation and support, left to themselves by their officers. This was followed by political criticism of Saakashvili’s management of the country and his regression from the promises of the Rose Revolution in 2003. The criticism inevitably includes references to the use of force against opposition demonstrators last November. Other targets are the return of corruption, the President’s personal style of leadership, the high turnover of ministers and high officials, the lack of internal debate, fraudulent elections, and the lack of media freedom (only one television chain, a state channel, is allowed to broadcast ‘news’; the others are confined to providing entertainment). There are also questions about the personality of the president, including his judgement and even his mental stability. The opposition movement is still timid, but here thing have clearly moved on from 8 August when the opposition parties declared a moratorium with the authorities in order to protect their ‘invaded’ country. That day, former defence Minister Irakli Okruashvili, now a fugitive in France, also declared his complete support to Saakashvili and expressed his readiness to come back to Georgia as a simple soldier to fight for his country. Switch of opinion Since then, there has been a switch in opinion, which occurred about 20 August with calls for dissolving the government, which Saakashvili could well do, and for the departure of the president, which is quite another question. In fact he has received the unintended backing of Russians who have described him as a political corpse and no longer a possible interlocutor. Of course, this prompted the response that Moscow had to deal with the elected, and silenced opponents, including those inside his close circle, who had the same thought but dared not look like being ‘sold to Moscow’. However, the danger to Saakashvili is not from Moscow, politically at least. It comes from his ‘Western friends’. The questions we mentioned earlier have been raised in different circles, including during a US Congress hearing where the main reproach to Bush was that he backed with public money a president whom Washington was unable to control – in short, another bad investment. There were also embarrassing questions about the way US aid funds pouring on Georgia (the second recipient after Israel) have been spent, and about Saakashvili’s attitude towards the opposition and the minorities who represent 40% of Georgia’s population. Similar questions have been raised in Europe, at both EU and national levels. Nearly all come back to human rights and legal issues, especially in the Council of Europe, and there has been an offensive by Georgian NGOs there, who can play the role that the Georgian opposition cannot play for the moment. The involvement of the EU, whose representatives shuttle between Tbilisi and Moscow, shows that any solution of the present crisis will escape the Georgian president’s overall control. EU and NATO divided He will also suffer from appearing as the man who produced tension between EU and NATO, tensions evidenced in statements by NATO Secretary General Jaap de Hoop Scheffer on the occasion of the visit of 26 NATO ministers to Tbilisi. During the visit (seen in the EU as an untimely diplomatic move, to say the least), the Secretary General echoed Washington’s dismay at the EU-brokered peace deal, saying that it only made things better for Moscow. For Georgia to be a factor of division even before entering pre-membership discussions is scarcely a promising start. In any case, Saakashvili will now be under more scrutiny and can no longer count on charm and flowery rhetoric. The time of facts is approaching; and it plays against him. Most damaging are calls for an inquiry into the way the war started, and it will not be enough to present some vague version of an intercepted Russian telephone call – at least outside the narrow but strong circle of people ready to accept anything against Russia. As Yulia Tymoshenko, another product of a coloured revolution seems to have realised in Kiev, there is a limit to Russia-bashing as political tool, and it is time to move on. But Saakashvili cannot move on. He has damaged himself beyond recovery. If the inquiry reveals that he did indeed start the operation and that he misled his Western friends intentionally, there will be no possible rescue operation. In this case, his only hope will lie in the lack of alternative leader. One should here remember what happened to former president Shevardnadze, who was also in his time the friend of the West and the darling of Washington. When he became too embarrassing, as we ourselves observed in advance at the time, Washington began looking for someone to replace him. Its almost religious belief in ‘new men’ led it to put its money on a young contender, with little experience but a tempestuous ministerial record, who had been studying in the US. Thus the fate of Shevardnadze was sealed. Choosing a successor Today a similar operation is almost inevitable but the problem is who to choose as his successor. Political logic would favour the former speaker of parliament, Nino Burjanadze, a heroine of the revolution with Saakashvili and Zhvania. She is formidably efficient, with great charm and very strong will. Having clashed with the president before the May parliamentary elections, she now heads the Foundation for Democracy and Development, an organisation that allows her to criticise the authorities while keeping her international and national network, without declaring herself in opposition. But she is born of a Soviet nomenklatura family, and by marriage and professional background she is part of the new nomenklatura. In short, she is not open to manipulation and not exactly what the Americans have in mind, despite her warm and regular reception in Washington. Another candidate could be from the entourage of Saakashvili, but his bunch of very young men with not much more than experience in Soros Institutes does not look like yielding what is needed. There is a also former presidential candidate, David Gamrelidze; and there might be an outsider whom nobody has spotted. But, in any case, the Americans will not drop Saakashvili too quickly, because it would look like a victory for Moscow. First test The first post-war political test will come on 3 November, with the elections in Ajaria. Nine parties will take part in elections to the regional Supreme Council, including the ruling United National Movement. The return of Ajaria under Tbilisi control has been one of the great successes of Saakashvili; it came after a brief armed clash, the departure of the local strong man, Abashidze, and a democratic victory by Saakashvili allies. The fact that the president thought he could repeat the operation with Abkhazia and South Ossetia should have alarmed his Western friends, because it showed a complete misunderstanding of the situation on the ground. In the case of Ajaria, Saakashvili was able to count on the help of Moscow, which sent a special envoy to persuade Abashidze to renounce power without a fight, in return for keeping a part of his money and being allowed to live peacefully in Russia. Of course, anyone who has followed the past twenty years’ events in Georgia, including the nationalist fever of the late 1980s and the civil war in the early 1990s, will be cautious about predicting developments . But in any country, a moment comes when reality overtakes great speeches. And time is short for Saakashvili, especially since he sees himself as a winner and shows no intention of changing his line. All this in a region where his actions jeopardise the fragile stability and threaten hugely important energy projects. 20 September 2008

The Turkmeni incident

A day after the promulgation of the new constitution (Sept. 12), a sharp resistance materialized in Turkmenistan Saturday 13^th September, in form of an “opposition rally” or “radical-muslim stampede“in the streets of Ashgabat,. Yet turkmeni magazines and News agencies report the version of a “Drug dealer shootout”. Little can be confirmed, given the accurate no-comment policy about the incident. Ostensibly, a group of 20-30 armed men stormed a Water Facility and took hostages. The reaction involved tanks and APCs. “Eurasia daily Monitor” makes good points in considering such a disproportional response.

A minor detail leaked though: Turkmenistan asked for help to the FSB in Moscow, showing how strong the CSTO-SCO geometry is. The way the problem was solved in a matter of hours and how the area was secured should recall us that Turkmenistan already knew the lesson by watching the periodical SCO military drills (see Picture) and obtaining the necessary intelligence from Russia and China.

Mysteries and incongruences may still linger, but as a matter of fact it won´t make any difference. The episode was a dangerous menace to the status quo or, to use a more Asian concept, to “Harmony”. Because Harmony and Stability are the purported mark of Central Asia and what precisely Shanghai Cooperation Organization is powered to stand for.

Terrorism Strikes Turkmenistan - source nCa

New Central Asia Commentary by Tariq Saeedi

Ashgabat, 16 September 2008 (nCa) --- The 9-13 of Turkmenistan has occurred. Terrorism – the evil of our times – has struck Turkmenistan.

On 13 September 2008, the law enforcement agencies fought a bloody battle with a large gang of well trained and heavily armed drug dealers. The gang was finally suppressed but the toll was heavy: According to independent estimates, some 18 officers and troops may have lost their lives.

The office of the prosecutor general of Turkmenistan is investigating the case. In ordinary circumstances, nCa doesn’t comment on cases that are under investigation. However, these are not ordinary circumstances.

Terrorism has cast its ominous shadow on a peace-loving nation, a nation that always goes out of its way to promote stability and harmony in the entire Central Asian region.

There is just one point we would like to emphasize: Unless the evidence suggests otherwise, it would be important to consider whether some foreign country or countries were involved in the incident in any way whatsoever.

One can rightly ask as to why some foreign country or countries should be suspected of involvement in this mess.

Here are some pointers:

• Looking at the number of casualties on the government side, it is easy to deduce that the gang of drug dealers was exceptionally large. Drug dealers in such large numbers will not band together unless induced by some power that has the motive and the means to do so.
  

• Why would drug dealers take up arms against the government, knowing that ultimately they are no match for the state firepower, without assurance of support from some external power?
  

• Training and arming a large group of people requires massive logistics and resources that are not available ordinarily in Turkmenistan.
  

• The central agency of a big power is well known for its cozy connection with the drug world. The same agency is known for using the drug money for financing some of its operations.

Some questions to ask are:

• Is there any country that feels particularly frustrated by the gas deals that Turkmenistan signed recently with Russia and China?
  

• Is there any country or countries that would benefit from terror and disorder in Turkmenistan?
  

• Is there any country that routinely spreads disorder and chaos around the world, the most current examples being Bolivia and Venezuela?
  

• In addition to a big power, is there any country zealously supported by that big power, which is angry on cancellation of some contracts? The country that could be angry on cancellation of contracts may also be the country in want of cheap gas.

These are just some of the reasons for suspecting foreign involvement in the 9-13 of Turkmenistan.

Additionally, one should also keep in mind the following:

• The cultural centre of a certain foreign embassy in Turkmenistan has lately been asking strange questions from the young people frequenting their premises. Some of the questions are: >> What kind of change would you like in your country? >> What aspects of the government policy you don’t like? >> What kind of changes does your society need?

• Lately a phenomenon of spreading rumours methodically is discernible. It is the system that was devised in Belgrade and repeated elsewhere.
  

• During the last year or so Turkmenistan has emerged as regional leader in anti-narcotic drive, as is evident from the reports of UNODC and other agencies. However, some country or countries would like to create an impression to the contrary because that would give them an opening for advancing their own agenda.

The investigators may like to keep returning to the key question: Which country or countries stand to benefit from chaos in Turkmenistan?

EU sees security in Sahara gas pipeline - Piebalgs

BRUSSELS, Sept 9 (Reuters) - A giant gas pipeline carrying Nigerian gas north across the Sahara desert could help the European Union diversify its energy sources, the EU's energy commissioner said on Tuesday.

The EU relies on Russia for about 40 percent of its gas and a third of its oil, but it has been seeking to reduce that heavy dependency since disputes between Russia and transit states like Ukraine highlighted the frailty of EU energy supply.

Friction over Russia's invasion of Georgia last month has pushed energy security further towards the top of the bloc's agenda.

EU Energy Commissioner Andris Piebalgs told Reuters he was deeply interested in plans to develop the 4,300 kilometre Trans-Saharan Gas Pipeline from Nigeria through Niger and Algeria en route to the Mediterranean.

'Nigeria is already very important for our security of supply -- 20 percent of their oil and 80 percent of their gas goes to Europe,' Piebalgs said by phone from Nigeria, ahead of discussions about coordinating on energy projects and finding peace in the restive Niger Delta.

Nigerian gas is currently shipped to Europe as liquefied LNG, but a pipeline is seen improving security and also the prospects of transit regions in Africa, thereby reducing the flood of migrants to Europe.

'The development of a trans-Saharan project with 20 billion cubic metres a year that might arrive to Europe by 2015 and increase the security of supply of Nigeria itself and the countries it crosses makes it a very interesting project for Nigeria and Europe,' said Piebalgs.

Nigeria has the world's seventh-largest proven gas reserves, but has been unable to develop its gas industry to anywhere near its full potential because of a lack of funds and regulation.

The EU is not alone in courting Nigeria for its oil and gas reserves. Last week, Russian gas giant Gazprom signed an oil and gas exploration agreement there, planning to develop LNG exports to north America.

Nigeria hopes to double crude production to 4 million barrels per day by 2010, although militant attacks on pipelines and funding problems have thrown those plans into doubt.

But Piebalgs said the goal, if achieved, could help further soothe oil prices, now at around $104 a barrel after hitting an all-time high of $147.3 in July.

'Plans to increase production to 4 million barrels per day in the coming years could have a very positive impact to keep global oil markets better supplied,' he said.

EU to help Africa expand energy sector

Report from the EU Observer September 9, 2008:

The EU is to help African countries expand their electricity networks and promote energy interconnections between Africa and the EU, such as a Trans-Saharan gas pipeline.

The EU aid will amount to €1 billion for a period of two years, the European Commission and the African Union announced in a joint statement on Monday (8 September).

The joint statement was signed on Monday in Addis Ababa, Ethiopia, by EU Energy commissioner Andris Piebalgs, EU development commissioner Louis Michel and African Union (AU) commissioner for infrastructure and energy, Elham Mahmoud Ahmed Ibrahim of Egypt.

It is the first concrete step to implementing the Africa-EU partnership, which was agreed in December 2007, according to a commission statement, which stressed "the urgent need to promote Africa electrification."

The EU is to offer technical assistance worth €10 million to African utility regulators, the statement adds.

A further priority of the Africa-EU energy partnership is to be the development of oil and gas pipelines between African countries, but also between Africa and the EU, such as the €9 billion Trans-Sahara Gas Pipeline, planned to transport up to 30 billion cubic metres of gas per year to Europe via Nigeria, Niger and Algeria by 2015.

The EU and AU commissioners also agreed to increase transparency, elaborate a road map for the launch and implementation of a renewable energy co-operation programme and support for Africa's participation in the Global Gas Flaring Reduction partnership of oil and gas producing countries.

The joint statement calls upon the European countries and the private sector "to further mobilise resources for investment in energy sector" on both the supply and demand side.

The EU will also provide additional contributions to the EU-Africa Infrastructure Partnership and its Trust Fund, while the AU commission confirmed its "willingness" to further progress in the implementation of the €55 million European Commission support programme for the period 2007-2011 for the energy sector.

Despite the announcement, however, the International Energy Agency has earlier warned that Africa needs to spend an estimated €400 billion by 2030 to generate an additional 260,000 MW of power.

A next meeting on the Africa-EU energy partnership will take place on 1 October in Brussels.

Britain & France will support freezing indictment of Sudan president

Sunday 14 September 2008. Sudan Tribune – The British and French government will back efforts in the UN to stall the issuance of an arrest warrant for Sudan president Omer Hassan Al-Bashir, the Guardian reported today.

[...] The human right advocates said that Britain and France will join the Arab League, African Union, China, and Russia in backing a resolution by the UN General Assembly this month requesting a deferral of the charges against Al-Bashir.

Both UK & France are members of the Hague based court and have been the main advocates of referring the Darfur case to the ICC.

The prosecutor of the International Criminal Court (ICC) Luis Moreno-Ocampo announced in mid-July that he requested an arrest warrant for Al-Bashir.

Ocampo filed 10 charges: three counts of genocide, five of crimes against humanity and two of murder and accused Al-Bashir of masterminding a campaign to get rid of the African tribes in Darfur; Fur, Masalit and Zaghawa.

Following that the AU, Arab League, Non-Aligned Movement (NAM) and Organization of Islamic Conference (OIC) called for invoking Article 16 which allows the UN Security Council (UNSC) to suspend the ICC prosecutions in any case for a period of 12 months that can be renewed indefinitely.

Libya and South Africa sought to force a suspension in the UNAMID extension resolution last July but failed to get the required number of votes and instead accepted a watered down paragraph taking note of the AU concern on the ICC move to seek an arrest warrant for Al-Bashir.

Grain equal to gas?

MOSCOW. (RIA Novosti economic correspondent Vlad Grinkevich) - The food crisis is compelling many governments to look for ways of curbing soaring food prices. At the same time, they are sensitive to any moves which might increase them. The intention of the Russian Ministry of Agriculture to transform its Agency for the Regulation of Food Markets (AFM) into a major Russian grain trader has caused an inordinately stormy reaction in the West. Analysts have accused Moscow of attempting to manipulate the food market. This change was announced last July. Along with tariff regulation, Russian officials believe that the state's involvement in grain exports will help protect the domestic market against skyrocketing grain prices which are a major cause of "agflation." Rosstat (the Federal State Statistics Service) reports that by the end of the third quarter of this year, food prices will grow faster in Russia than in the European Union (EU) as a whole. Last June, they went up by 1.1% in Russia (by 12.9% since the start of the year), whereas in the EU they increased by a mere 0.3%. Prices on bread and bakery products grew by 2.4% in Russia in June. The ministry wants the government to transfer its controlling interest in 28 of Russia's major grain elevators and export terminals to the AFM. The aggregate sum of the transferred shares may reach $300 million to $400 million. The West has perceived the potential appearance of a new player in Russia as a threat. The Financial Times has accused Russia of an attempt to gain an instrument to pressure the world market. Analysts believe that in four to five years, the new company will establish control over up to half of Russia's grain exports, and will become similar to Gazprom in its influence of the market. The U.S. Department of Agriculture (USDA) has also voiced its concern over the appearance of a major Russian grain trader but it is not clear whether U.S. officials are worried about the world grain market, or about Russian private companies. The USDA complains that the AFM will prejudice the operation of these companies, and described the plan as a giant step back into the Soviet era. Russian experts believe that the West's concern is exaggerated. It is not clear what the new agency will be like, and who will take part in it. Dmitry Rylko, director of the Institute for Agricultural Market Studies (IAMS), told RIA Novosti: "The importance of this agency is overrated. Even if it accumulates all the state-owned shares in the grain companies, it will not be the biggest player in the market. It will dominate the market only if it is joined by some private players. Nobody knows whether this is going to happen." In the IAMS's estimate, more than 60% of the market belongs to six private players: the International Grain Company Agrika, Rosinteragroservis, Yugtranzitservis, Yug Rusi, and Aston. The apprehensions that Moscow may turn food into a diplomatic weapon and use it as Gazprom is using gas may sound flattering, since the Russian government does not conceal its desire to turn Russia into the leading player in the food market, but they are certainly premature. It would be inappropriate to compare the AFM with Gazprom which is the world's largest gas exporter, and the owner of the world's richest gas deposits. In the grain market, Russia ranks fifth after the United States, Canada, the EU and Australia. This does not mean that its role is small. Russia has the lead in a number of regional exports, for instance, in Egypt and in India. Russian officials would like to enhance Moscow's influence on the world food market, primarily the grain market. However, their previous initiatives did not cause such a dramatic response in the West. For example, the Russian agricultural minister has more than once voiced his idea of setting up a grain "OPEC" to coordinate world trade in grain. But Russian experts are not very enthusiastic about this prospect largely because the various grain-producing countries aren't likely to coordinate their actions as OPEC does with oil. The OPEC members have state monopoly on oil production and exports, whereas grain trade remains in private hands in the majority of grain-exporting countries.

---------------------------------------------------------------------------------------------

An article from early August that I fail to appreciate in its importance. It confirms the state run drift in Russian economics, saluted by international market protest.
But, according to World Grain :

According to these rumors, the push for a greater government role in both domestic merchandising and exports has not only been supported by major agricultural holding companies, it in fact was actively promoted by them. Certain holding companies, despite enjoying record high prices for grain, reportedly face serious financial difficulties and are looking to the government for what amounts to a partial buyout of their grain handling assets.

Seems that Russia is starting to bank over the newfound liquidities. India and China, aside from being resources-hungry, may one day get simply ... hungry.

Enter Saddamkashvili

A brief blog-roll and reading throughout the web prompt me to some off-the-cuff comments.

- Georgia conduct was dishonest in granting a ceasefire and suddenly strike in South Ossetia. I find the calculation of blur the attack with the Olympiads opening particularly disturbing, as the Olympiads were meant since their beginnings as a ceasefire and temprary peace between the polis of the greek world, from Sicily to the Colchis (present day Georgia-Abkhazia). It was considered an act of Impiety to wage a war in those times.

- The media talk incessantly of asymmetric war between Georgia (4.5 Mio People) and Russia (142 Mio). I shall rectify: Georgia (4 Mio people) and South Ossetia (70.000).


- Georgia´s president, Mr. Saakashvili, reportedly made a priority of his mandate to re-consolidate Georgian borders and sovereignty, ahead of any other plan to better off the country. My opinion: this re-consolidation is aimed at assuring a safe passage through Georgia of the BTC (Baku, Tbilisi, Ceyhan pipeline). It is a clearing of hurdles rather than a pacification, with absolutely no carrot attitude towards South-Ossetia, perhaps because there is simply any...

- Quoting Winthrop360 post: "The famous Baku-Tbilisi-Ceyhan was blown up in Turkey earlier this week and its operator, BP, shut it down for repairs. Coincidentally, the Georgian section of the pipeline is filled with oil - oil which basically has nowhere to go (how convenient). I think, with a good deal of certainty, that Georgia will tap BTC oil in Georgian territory, citing an "emergency."" I quite agree, Georgia is basically segmenting itself from all the region, defying irresponsably Azerbaijan, Russia and allies (SCO, CSTO, CIS) with its pro-US stance.

- Which leads me to the conclusion: given the strong Georgian opposition rallies (and the subsequent crackdown) the whole responsability is of Mr. Saakashvili behaviour. A quick screening of the European press show the dissociation of EU states from such a war-mongering interlocutor. Saakashvili in this turn seems to me very much the early Saddam, drummed up to a war to Iran no matter what, under his US patron´s distrustful and half-hearted glance.

I would try to explore better the US tactic of proxy wars in contests of scarce operativity and rescue capability. The extent of US proclivity to such war mongering instead of diplomacy and negotiation needs some intelligence.

Scenarios for Georgia's South Ossetia crisis

(Image source: Wikipedia)

(Reuters) - Fighting raged in and around the capital of Georgia's breakaway South Ossetia region on Friday as Georgian troops, backed by tanks and warplanes, pounded separatist forces in a bid to re-take control of the territory.

The following are possible scenarios:

* Georgia, whose army and reservists total around 18,000 soldiers, swiftly completes its assault on breakaway South Ossetia before Russia can mobilize a major military response.

A Georgian victory could spark an exodus of non-Georgians to Russia. The majority of the breakaway region's roughly 70,000 population feel close to Russia and are ethnically distinct from Georgians.

Should Georgian troops quickly establish control over the territory it could prove more difficult for the Russians, diplomatically, to seize back control of the province by sending in its own forces.

* Failure by Georgia to quickly establish full control over South Ossetia could allow Russia, which has a peacekeeping mandate in the region, time to launch a counter-offensive, arguing that it needs to protect its own peacekeeping forces as well as civilians, most of whom have Russian passports.

Georgian officials say Russian armor is already pouring into the region from across the border. Hundreds of volunteers from Russia and another Georgia's breakaway region of Abkhazia, were reported to be making their way to South Ossetia.

* If Georgian troops fail to retake South Ossetia, Tbilisi could be vulnerable to political and diplomatic pressure from the United States and Europe to halt its offensive. The European Union is wary of antagonizing Russia, one of its main sources of energy. Some European members of NATO, also wary of President Mikheil Saakashvili's record in clamping down on opponents, have resisted moves to put Georgia on a fast track to membership. Russia fiercely opposes NATO membership for its former Soviet satellite.

* Outright defeat for Georgian forces, with a retreat to pre-conflict positions, would be a humiliation for Saakashvili. He has made it a priority to win back control of South Ossetia and Abkhazia, another rebel region on the Black Sea. Defeat could also boost his domestic opponents and raise doubts about Georgia's pro-market reforms and drive to align itself more closely with the West.

14 hours of Conflict - How is Georgian blitzkrieg faring?

Sources are Regnum.ru and RIAN

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01:07 08/08/2008

Direct military action is taking place near the capital of South Ossetia between Georgian and Ossetian troops.

President of South Ossetia Eduard Kokoity announced that South Ossetian troops had been built up to contain Georgian units. “A violent fighting is taking place."

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01:47 08/08/2008

The storm of the South Ossetian caputal is taking place in all directions, reports the website of the South Ossetian Information Committee. [...]

Georgian artillery troops are firing at governmental and residential buildings in central Tskhinvali. [...]

Earlier, Georgia confirmed its intention to solve the Georgian-Ossetian conflict by force. In particular, Commander of Peacekeeping Operation of the Georgian Armed Forces Mamuka Kurashvili announced that the Georgian side “launched an operation to bring constitutional order to Tskhinvali area.” At the present moment, Georgian troops continue firing from howitzers, mortars, Grad multiple launch rocket systems and large-calibre artillery.


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02:02 08/08/2008

A block of governmental offices in central Tskhinvali has been completely destroyed. The city is on fire, reports a REGNUM correspondent from the site. Artillery shelling of the South Ossetian capital by Georgian troops has continued.

As Assistant Commander of the Joint Peacekeeping Forces Vladimir Ivanov said, positions of Russian peacekeeprs in the Georgian-Ossetian conflict zone has not been subjected to fire yet. “There has been no direct firing at peacekeepers' posts from the Georgian side. The peacekeepers continue fulfilling their task of monitoring the developments in the conflict zone,” he noted

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11.55

MOSCOW, August 8 (RIA Novosti) - Russian President Dmitry Medvedev will chair an emergency meeting of the national Security Council in the next few hours to discuss the situation in Georgia's breakaway region of South Ossetia, the president's spokesperson said on Friday.

Georgia launched a full-scale attack on its breakaway republic of S. Ossetia overnight, using tanks, combat aircraft, heavy artillery and infantry. Georgia said it had captured most of its breakaway republic and called on the separatist authorities to surrender.

"The Security Council will consider as soon as possible proposals to settle the situation in the region," Natalia Timakova said.

South Ossetia said at least 15 civilians had been killed so far and Russian peacekeepers said Georgia had shelled their positions, wounding several Russian servicemen.

Russian Prime Minister Vladimir Putin, who is currently in Beijing, warned that Georgian aggression against its breakaway region will provoke a "response".

"The situation is very sad. It raises concerns and will certainly incur a response," Putin said.

Russia's UN Ambassador Vitaly Churkin called on the UN Security Council to intervene to stop violence in the region, but the council failed on Friday to reach an agreement on a Russian-drafted statement.

Several Russian lawmakers on Friday called for military action against Tbilisi in response to Georgia's aggression.

"Russia must interfere in the conflict to stop the violence," influential MP Konstantin Zatulin said. "Russia must consider a military operation because our peacekeeping contingent will not be enough to ensure peace in the region."

State Duma speaker Boris Gryzlov said Russia would protect its citizens in South Ossetia. Many residents of the self-proclaimed republic hold Russian citizenship.

South Ossetia and another Georgian breakaway republic, Abkhazia, broke away from Georgia following the collapse of the Soviet Union in 1991, gaining de facto independence after bloody conflicts with Tbilisi.

Georgia has pledged to bring the two tiny republics back under central control and has accused Russia of trying to annex the regions.

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14:35 08/08/2008

"The Georgian authorities have unleashed a dirty war," the ministry said on its website, echoing statements from Russian officials and lawmakers who have condemned the ongoing Georgian ground and air offensive, which has killed several people including Russian peacekeepers.

"Bloodshed in South Ossetia will be on their conscience. We will protect our peacekeepers and citizens of the Russian Federation," the ministry said.

Georgia launched a major offensive overnight in its breakaway republic, where many people hold Russian passports, using tanks, combat aircraft, heavy artillery and infantry. Georgia says it has captured most of the region, and has called on the separatist authorities to surrender.

South Ossetia earlier said at least 15 civilians had been killed, and Russian peacekeepers said Georgia had shelled their positions, killing and wounding several Russian servicemen in the regional capital, Tskhinvali.

Georgia's pro-Western president, Mikheil Saakashvili, announced a full mobilization in the country. He also accused Russia of bombing Georgian villages, a claim Moscow swiftly rejected.

NATO, the European Union and the United States, a key ally of Georgia, all issued statements urging the sides to bring an end to the conflict.

Georgia's Rustavi-2 television said government troops had shot down a Russian military plane over Georgian airspace on Friday. The channel said several Russian planes had earlier dropped bombs on the town of Gori, to the south of South Ossetia.

Russia's Foreign Ministry dismissed the report as "mere ravings, another vile provocation by the Georgian authorities." The Defense Ministry called the report an "information provocation," and said no Russian aircraft had been downed.

South Ossetia - War alright

Goergia and South Ossetia have begun a full scale war.
As to 12.56 of August 8th, here is the status quo.

(RIA Novosti) - Georgia said on Friday it had seized control over almost all towns and villages in its breakaway republic of South Ossetia, following a major ground and air offensive.

The Georgian military attacked South Ossetia's capital of Tskhinvali early in the morning with tanks, heavy artillery and infantry, sparking condemnation from Russia, which has warned of "emergency measures" to end the conflict. South Ossetia earlier said 15 people had been killed in the attacks, several buildings were on fire in the city center, and the local parliament building had burned down

Georgian Reunification Minister Temur Yakobashvili said the military was continuing its offensive in Tskhinvali. However, he denied reports that Georgian planes had been bombing the city.

"There is no bombing of Tskhinvali. Street battles are continuing in the city, involving our soldiers. We do not plan to bomb our own servicemen in Tskhinvali," he told a video linkup hosted by RIA Novosti.

The rebel administration had said Georgian Su-25 Frogfoot attack planes had bombed the South Ossetian village of Kvernet as well as a humanitarian aid convoy.

Georgian President Mikheil Saakashvili gave a starkly contrasting version of events, saying Georgia had "liberated" South Ossetia from separatists, and that Russia was bombing Georgian villages.

"Most of South Ossetia's territory has been liberated and is now controlled by Georgia... I call on Russia to stop bombarding peaceful Georgian towns," he said in a televised address to the nation.

The Georgian offensive came the morning after Georgian President Mikhail Saakashvili declared a unilateral ceasefire, and after the UN Security Council gathered for an emergency meeting.

Georgian PM Lado Gurgenidze said that Georgia had launched the attack on Tskhinvali after South Ossetian separatists had broken the ceasefire and attacked Georgian villages.

Peacekeeping commanders in South Ossetia said the Georgian military had shelled their headquarters in Tskhinvali, killing and injuring several Russian peacekeepers and destroying several barracks.

Georgia's Interior Ministry had earlier claimed that South Ossetian separatists were planning to attack Russian peacekeepers in order to bring Russia into the conflict.

Russian Prime Minister Vladimir Putin, currently on a visit to Beijing for the start of the Olympics, warned that Georgia's actions would meet a "response."

He said he had discussed the issue with U.S. President George W. Bush and top Chinese officials, who had agreed that full-scale war must be prevented.

At the Security Council session, Russia's UN Ambassador Vitaly Churkin called on the council to intervene to stop violence in the region.

The Kremlin also held emergency talks on the conflict, and said it was considering urgent measures to end the attack on South Ossetia.

Russian President Dmitry Medvedev "is heading a meeting to discuss a series of urgent measures to stop the violence in South Ossetia, to protect the civilian population and Russian citizens in the conflict zone," the Kremlin press service said. Many residents of South Ossetia hold Russian citizenship.

Georgian Prime Minister Vladimir Gurgenidze said Georgia would continue its military operation until peace was established.

"The goal of Georgia's actions in the conflict zone is to establish peace in the region. And we will not stop until we have attained this goal," he said. (VIDEO)

He said the country would offer an amnesty to South Ossetia's leaders, and provide over $35 million in reconstruction aid for the province after the establishment of Georgian control.

GAZPROM’S EUROPEAN EXPANSION DILEMMA

Source : Eurasia Daily Monitor

Russian planners have consistently underestimated the rapid growth of gas consumption within Russia and the EU’s newly found ability to find alternative sources. A 2005 study prepared by Gazprom’s Research Institute for the Economics of the Gas Industry, NIIGazekonomika, revealed in a 2005 report that domestic consumption of natural gas was increasing at a faster pace than projected in Russia's Energy Strategy, the official guidelines for the energy sector adopted in May 2003. NIIGazekonomika found that earlier projections of Russian domestic consumption of gas were based on unreliable Soviet era data and were found to be off the mark by tens of billions of cubic meters (bcm). Domestic consumption, they claimed, was rapidly growing due to a number of factors: (1) The low price of gas for domestic consumers, which has been encouraging consumption; (2) The energy intensive nature of Russian industry; (3) Gazprom’s monopoly of the Russian pipeline system; by trying to maintain this monopoly, Gazprom has discriminated against independent producers of gas by limiting their access to the system (this applies mostly to oil companies, which are forced to flair off billions of cubic meters of associated gas); (4) Gazprom’s reluctance to investment in new gas fields that would replace the four currently producing fields, all of which are facing severe depletion rates; and (5) Russia’s pressing need to rely on the sale of relatively small quantities of Central Asian gas to Europe (10 bcm) in order to meet domestic needs and new export commitments. This quantity is bound to increase dramatically in the next few years.

On July 7 the Russian Daily Kommersant reported that Russian Deputy Prime Minister Igor Sechin had ordered Gazprom and the Federal Antimonopoly Service to expedite independent Russian gas producers’ access to Gazprom’s gas pipeline system. Sechin, widely regarded as the head of the siloviki or power clan in Russia, is also the chairman of the board of Rosneft, Russia’s largest oil company. Rosneft produces some 6.6 bcm of associated gas. Other independent gas producers (Novatek produces 15 bcm, Lukoil and Surgutneftegas seven bcm each, and TNK-BP 4.9 bcm) account for a combined total of 14-16 percent of all Russian gas production. All have faced obstacles from Gazprom in selling their gas, and many are flaring it off. These companies are currently being offered $46 per 1,000 cubic meters by Gazprom for their gas, while the price on the Russian market is $71 per 1,000. At the same time, Gazprom sells gas for an average price of $400 per 1,000 cubic meters in Europe. Adding to the current uncertainty, Russian President Dmitry Medvedev’s trip to Central Asian gas producing countries last month did not result in any firm commitments, only vague agreements in principle from the leaders of those countries to come to Russia’s rescue. Those countries have discovered new markets in China and India and are complicating Moscow’s ambitious plans in Europe".

Snub for Iran eases nuclear crisis

By M K Bhadrakumar (excerpts)

The unnamed Russian diplomat said the SCO foreign ministers at a meeting in Dushanbe, Tajikistan, a week later would decide on whether to lift a moratorium on bringing in new states. “The moratorium has lasted for two years. We have now decided to consider the possibility of the SCO’s enlargement,” he said. It appeared that weathering US opposition, Moscow was pushing Iran’s pending request for SCO membership. Founded in 2001, the SCO currently comprises China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Iran has observer status.

However, in the events, following the meeting in Dushanbe on Friday, Russian Foreign Minister Sergei Lavrov revealed that the foreign ministers did not discuss the enlargement of the SCO, while finalizing the agenda of the organization’s summit meeting on August 28, and that Iran wouldn’t be able to get the status of an associate member.

[ . . . ]

Since such issues are invariably decided within the SCO on the basis of a consensus between Russia and China, it stands to reason that either Russia didn’t press Iran’s membership case or China disfavored the idea. On balance, it seems to be a combination of both. Conceivably, Moscow didn’t press after informally ascertaining Beijing’s lukewarm attitude. Tajikistan, which hosts the SCO summit in August, has openly favored Iran’s membership. If the two Big Brothers had given the green signal, Tajikistan would have asked Iran to come in from the cold. No doubt, Tehran, which openly canvassed for SCO membership, has suffered a diplomatic setback.

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The possibility of a moratorium lifting in Dushanbe SCO meeting was not solely meant for the Iranian case. The case is for countries that inevitably fall in the group interests and wish to have a common table to discuss problems. It is the case for Mongolia, that after the regime-change attempt will be all too poised to formalize a SCO membership. It may be also a vested invitation to Turkmenistan, to consider an application as observer.

India questions IPI project viability

LONDON, July 28 (IranMania) - The Indian government casts doubts on the Iran-Pakistan-India gas pipeline project, saying its economic viability has to be studied, PressTV reported.

"We have to see the economic viability of the pipeline, given the extra costs of insurance, since the pipeline will pass through areas that are not stable," said Indian Prime Minister's special envoy, Shyam Saran, in New Delhi on Saturday.

His remarks come about 10 days after the Iranian Oil Minister Gholam-Hossein Nozari and his Indian counterpart Murli Deora agreed in an energy conference in Madrid to finalize the IPI project deal by August.

Iran has addressed India's concern on the security of the pipeline passing through Pakistan by agreeing to move the delivery point to India-Pakistan border.

"We are discussing this with Iran and Pakistan now," Saran said. "If the costs are too high and we're locked into an agreement for the next 50 years, then we have a problem."

The three countries are scheduled to meet in Tehran in late July to discuss the remaining issues in the multi-billion-dollar project, including the key issue of price which has remained unsolved between Iran and India.

Iran and Pakistan have finalized a Gas Sales Purchase Agreement, based on which a periodic gas price adjustment will be agreed to by the two countries, but India has not agreed to price revision.

The United States seeks to stall an agreement on the project, also called the 'peace pipeline', to exert pressure on Tehran over its nuclear program.

The 2,775-kilometer gas pipeline will initially transfer 60 million cubic meters of natural gas per day from Iran to India and Pakistan, with capacity set to eventually increase to 150 million cubic meters per day.

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Just days after Murli Deora stated that TAPI (Turkmenistan-Afghanistan-Pakistan-India) was not feasible. To think that Pakistan is also promoting some negotiation with Balochi tribal leaders by creating a sub-committee.

Tri-lateral meet on IPI gas by July 2008

New Delhi, Tue, 24 Jun 2008 NI Wire

A trilateral ministerial meeting between Iran, Pakistan and India is likely to be held in July this year for sorting out all the problems regarding Iran-Pakistan-India (IPI) gas pipeline project, as per official source informed on Monday.

After concluding the oil meeting on Sunday, Indian Union Oil and Natural Gas Minister Murli Deora met his Iranian counterparts Gholam Hossein Nozari for resolving the obstacle in the way of IPI gas Pipeline project.

Indian oil minister informed Iranian minister about its interest in the multi-billion dollars gas pipeline project, besides notifying him in brief about the progress held in a bilateral meeting between India and Pakistan that was held earlier in April, 2008, in Islamabad.

India and Pakistan had solved the primary price differences and transit issues in a bilateral talk and a trilateral meeting is on the pipeline to sort out all differences before finalising the USD7.4 billion project.

“Most of the bilateral issues have been resolved and now a trilateral meeting of oil ministers of the three countries is most likely to take place in Tehran next month,” Petroleum Secretary MS Srinivasan informed on Monday.

Besides IPI project, India has also talked on several issues related to development of the hydrocarbons. The last trilateral meeting was held in June 2006, at New Delhi.

India, however, has accused Pakistan for making delay in this talk illustrating the reason: the frequently ministerial level changes in Pakistan. “Now, Pakistan Oil Minister has changed again”, said Srinivasan by adding, “We want to be sure that the new minister is in connect with what had been agreed on April 24 bilateral meet.”

India has problem with Iran on two major issues: price revision clause and gas sale agreement, which are expecting to be sorted out in this trilateral meeting.

‘Iran wants to deliver the gas for both the countries at the Iranian-Pakistan border while India wants the gas delivering point at Indo-Pakistan border. Pakistan has agreed on this point and assured India for its support,’ the Petroleum Secretary said.

While, on the price differences Iran is seeking to add a price revision clause in the Gas Sales Agreement, which India is opposing. “One can keep on discussing the clause for the next three year or five years and we do not need to be rigid on this point,” added Srinivasan.

The proposed IPI gas pipeline is an ambitious plan which will reduce the problem of natural gas deficiency and fuels both in India and Pakistan. Moreover, considering the increasing energy demands, it would be a huge boost to India, which produces only half of its natural gas needs. The work is expected to begin next year while the projected target of its completion is scheduled by 2012.

In the first phase, Iran would release the gas 60 million cubic metres daily, which would be distributed equally between India and Pakistan but later Iran would enhance the releasing limit up to 150 million cubic metres, as per the signed agreement.

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Sochi olympics as Abkhazia´s economical trigger

Russia has opened lucrative contracts associated with the 2014 Sochi winter Olympics to contractors in Abkhazia. Abkhazia will be the main supplier of building materials for construction work in the run-up to the Sochi Olympic Games in 2014, de facto president of the breakaway region, Sergey Baghapsh recently said. Tenders for the construction of concrete factories have already been reported.

So after a CACI-analyst study of Georgia separatist regions. Sadly for its detractors, it seems that Russia has the money and the vision to attract again the former CIS belt into its manor. Stability and rule of law, however predictable, do pay.

Clashes in South-Osetia intensifies: death-toll reaches 29

According to South Ossetian forces, 29 servicemen were killed since the early August outburst of the conflict, numbers that are not confirmed by Tbilisi. Meanwhile the children evacuation from Tskhinvali reaches 540 and is supposed to halt at 1,000. Russia has called for the US participation in the down-toning of the conflict, given the silence from US State department.

Russia and Libya: tiptoeing to a Gas Cartel?

Since Thursday 31^st Libya and Russia are finalizing their cooperation: Libya as major gas and oil producer, Russia as the problem-free dream-investor. Taking into account agreements with Algeria, resources deals from Maghreb to Mashreq of former Soviet allies follow an interesting script: oil for debt-scrap & weapons.

Moscow cancelled the debt Libya had (up to $4.5 billion), “in exchange for multibillion dollar contracts for Russian companies" after Russian Finance Minister Alexei Kudrin. For the contents of the agreements I rely on Dr. Ariel Cohen findings, namely “$3.5 billion for the state monopoly Russian Railways (RZD) to build a 500 kilometer rail line in Libya between the cities of Sirte and Benghazi, (admittedly) [...]$2 billion to $4 billion Russian deal to sell the Libyans modern arms [...]12 of the latest Su-35 multirole fighters (or Su-30MK2 according to other reports); a dozen MiG-29 SMT fighters; S-300 PMU-2 long-range surface-to-air missiles, Tor-M2E short-range SAM systems, military helicopters, submarines, warships, and army equipment.”

Securing a partnership with EU suppliers of gas and oil will unfortunately mine any energy diversification policy Brussels may consider. Talks of a Gas cartel are re-iterated, and look now more likely: Russia has been benefitting from Algeria´s expertise in LNG technology since their agreements in 2006. Moreover the deal with Algeria and recent visit to Nigeria put Gazprom closer to have a stake on the NIGAL pipeline (a.k.a. Trans-Saharan gas pipeline) or finance it.

Tshkinvali shelling: Georgia lured into open confrontation?

After Abkhazia is cleared from the world opinion, South Ossetia is stumbling into uncontrolled conflict. After a Georgian civil water cut was matched by a South-Ossetian water slashing, troop re-deploying was observed by South-Ossetian border forces, in numbers of “an artillery battalion and two mortar batteries from the 4th motorized brigade of the Georgian Defense Ministry”, moving from the army base in Gori to Tskhinvali.

Sniper firing was reported to kill 6 South Ossetians in the regional capital Tskhinvali, and as of Saturday 2nd, South Ossetian prime minister Yury Morozov ordered women, children and old people from vulnerable areas to be evacated.

South Ossetian envoy to Russia, Mr Dmirty Medoyev, precised in early July help could come from North Ossetia. Hereafter an interview from Rossiya TV.

Lack of any economic interest would make one think this conflict is a mere proxy war that was staged by Russia in retaliation of Georgian participation in the BTC (Baku Tbilisi Ceyhan) pipeline, and duly used to steer the country towards Moscow again. Yet the conflict was frozen since the demise of the USSR, before pipeline dreams were afoot. The two regions just follow their petty interests as mainly dependent on Russian tourism and trade with the north, the lack of compelling business-talk from Tbilisi being a demonstration of the current dis-functional Georgian comundrum.

Moscow may think well to enhance the already flourishing economic relationship with Sukhumi. An economically booming independent Abkhazia (it is unclear to which shade) would supposedly lure Georgia to re-open business with Russia.

What is more interesting, Moscow is not openly demanding for any annexation, insisting that South Ossetians and Abkhazians are sovereign states fit to decide, impliciting that the current situation serves her at best. Certainly a North-South Ossetia unification will alter the uneasy ethnic balance with the Inghush people, another frozen conflict Chechen separatists tried to torch with the Beslan School Hostage crisis.

On the other side, the lingering as Break-away provinces can´t continue ad libitum.

Don´t TAP-IT, IP-IT: new perspectives to India after the July 25th agreement

Just as in the Woody Allen comedy “Take the money and run”, petty plans always pay. The scenario of securing Central Asia Gas to India has caved in after the penstrokes in Ashgabat decided the resources to be of Russian property and so all the drilling projects to be started. The TAPI pipeline project was being talked to connect the Gas fields in Turkmenistan to India through Afghanistan and Pakistan. I will try to make an argument: it wouldn´t be built at all.

Far from being unlikely due to the troubled areas it is passing through (Eastern Afghanistan and Kandahar: land mined and subject to Taliban treat ), it would simply be empty as the source has changed its mind. The agreement between Russia and Turkmenistan (possibly hinted by Turkmenistan when referring in late june to better buyers" ) makes it clear where the gas would be going: from Turkmenistan to China via Russia.

To India is a bad blow and the second frustrating loss of precious resources to its more savvy competitor since the Myanmar deal. It seems now that the only alternative brings in Iran with the IPI (Iran-Pakistan-India) pipeline.

It is a more sound agreement in terms of feasibility, a deal shorter and passing through more friendly territory geographically and anthropologically; the only problem here is represented by the Balucistani Liberation Army (BLA) and the fees that since the project conception (1990) keep fluctuating. Yet in June 29^th, after the Turkmen hype of the prices, a gas sale and purchase agreement (GSPA) was finalized in a 7.4 billion dollar deal.

With Caspian oil tapped away to US interests, the big development is either the acceptation of Russia stand in Central Asia (and its reliability) or the mildening of relationship with Tehran.

In either case, it would prove an interesting precedent for Azerbaijan and Uzbekistan and would just accelerate Turkey eastward lean.

Ascertaining the obvious, the sun rises from the East.

South Stream Vs Nabucco: the Turkmeni affair

Within the turn of the week, the thorny issue of Caspian gas to EU has also dramatically changed. In short, Nabucco is down and South Stream is up.

Bulgaria has given the ratification of the South Stream (that comes after the Greece, Serbia and Austria ) pipeline, which is expected to run with Azerbaijani gas. Meanwhile Turkemistan is granting its gas to Gazprom , undermining the Nabucco project. As the article points clearly, there is now insufficient gas to have Nabucco project feasible and meaningful, unless it is considered the “Hobson choice”: Iranian gas. Turkey, pushing for Nabucco as South Stream bypass Turkey via Black sea, is already lobbying Tehran to double the existing Iran.-Turkey pipeline.

It is still unclear whether it would be iranian or (again) turkmeni gas to be pumped in the pipes, and the memory of January 2008 shortages due to Theran- Ashgabat strife and occasional pipeline blowups are always reason for concern.

In any case Registan.net makes a good argument why South Stream would be more viable and more likely to occur. Not only it is shorter and economically more sound, but it cuts short of problematic areas with separatism problem (Georgia, Turkey), bypassing the crowded Bosphorus.

SCO Dushanbe summit: Afghanistan has a new gardener

SCO next meeting, in August 28^th in Dushanbe – Tajikistan, will be an important demonstration of the maturity the organisation has gained in the last decade. It is significantly set after the Olympiads, as if it intended to appreciate the security SCO can deliver to China in terms of Anti-Terrorism intelligence. It will also be a test to the capability of the organization to make safe its “Bagh”, its garden as the Middle ground between oil and gas-fields and Indian and Chinese soaring economic zones.

Securing this part of the world (that spans from XinJiang to Kashmir and Iran) is a matter of infrastructures and Military self-sufficiency, coupled with single states´goodwill. We have a good example of this in SCO dealings with Afghanistan. As said in a precedent post, SCO produced to Afghanistan a broader “Loya Jirga” in an early summit in Kyrgyzstan. The supposed aim was to lay patent the intertwined interests and problems of the region, specially in the current worsening Afghani-Tajiki border problem (in 2005 Russia retrieved its border guards Tajikistan to the current four-fold increase of drug trafficking).

Given its record-high opium production SCO is considering a joint action with India and China “to build drug-secure belts around Afghanistan”, after the expression of Russian Foreign Minister Lavrov. The stance was reiterated in early July by Russia in a UN Security Council on Afghanistan and was shortly followed up by the Tajiki proposal, suggested in July 28^th, of an SCO regional antidrug center in Dushanbe, Tajikistan. Afghanistan is therefore benefiting form strategic help in its illegal traffics (that finance mainly the Taliban insurgency) while being provided with Russia weaponry.

Nord Stream opening delayed

Alas, Nord Stream delays his delivery to 2012. EU environmental concerns , notably raised by Poland, Sweden, Estonia and Denmark, may have played some part in it. However seems that neighbouring Poland is voicing interest: if not to halt the project, Poland may partake, in the prudent words of former President Kwaśniewski . Obviously it would then make no strategic sense for Germany and Russia to bypass Poland and the Baltics just to have them as stakeholders. A more feasible solutions would be to have them benefitting from the materials and technology supply, as is the case of italian SAIPEM (see former post about Nord Stream).

Would Afghanistan join the SCO club?

In May 25^th Afghan foreign Minister Mr. Spanta stated that Afghanistan is not interested in neither SCO or CSTO membership. The declaration came after a Pakistani proposal; NATO to join SCO in Afghanistan. Yet the recommendations and diplomatic efforts to have the landlocked country join forces with other partners have all but ceased. Just last month in Issyk-Kul, Kyrgyzstan, a summit bearing the title "Afghanistan, SCO, Central Eurasian Security and Geopolitics" showed the high interest in Afghanistan pacification as well as it displayed the Afghani stranger" elements that would possibly play a stabilizing role in Afghani politics. Tajiki is for example an important minority in the north, that happened to be the back-bone of the Northern alliance, Uzbeki are important MP´s and local chiefs (some say “warlords”), Shi´a Hazara is the ethnicity that may prove useful in dealing with Iran. This seizing of the stakeholders multiplicity was perhaps the main success of the conference, and points directly to Central Asia ties in every attempt to studying a really democratic and pluralistic Loya-Jirga. Moreover, it befriended Afghan authorities with SCO proceedings and featured the Friedrich Ebert Institute, testifying that Europe is not idle.

If Afganistan is to join SCO, it would be a chance to meet another major actor in Afghan struggle, Iran, in a multilateral environment. As a matter of fact Iran wants to improve its relationship seeking a full membership, now hindered by its Nuclear Program.

Moreover it would help SCO to exit an impasse. As the interesting analysis of Dr. Erica Marat stresses, Russia and China are said to be weary over the very mission of SCO.

Russia is seeking to merge CSTO and SCO, which concerns China as this would definitively present the organization as military, whereas it has been kept up to now an economic partnership (despite the military drills, which Chinese authorities don´t want to be re-staged).

Afghanistan and Iran membership would re-connote the organization as Strategic (not merely economic) and move the balance of the organization towards the observers Pakistan and India.