EU-Russia summit in Kanty-Mansiysk (Siberia)

The EU-Russia meeting in Khanty-Mansiysk is over, amid talks of inconclusiveness and wishful diplomatic liturgy. I would try to shed some light on what the outputs may be.

The meeting was meant to discuss sensitive strategic and economic issues, notably Georgia situation, Eastern Europe NATO missile shield, EU energy Policy and a new Partnership Cooperation Agreement.

It has been prepared as the Slovenian presidency final Foreign Policy firework, much like the Central Asian states meeting at the end of German EU presidency of last year.

The primary output is the agreement on beginning the negotiation on a Partnership Cooperation Agreement, i.e. negotiations are barely set to start in July 4th.

The former PCA expired in 2007, and a new drafting was then blocked by Poland. The Veto was officially meant to frustrate Russia due to trade confrontation following the ban of polish meat in Russia. However it was also suggested to be a signal to EU and its supposedly bossy attitude towards Poland.

As for an energy treaty, alas the Siberia meeting has not brought appreciable results. Europe voiced her interest in free access to Russian energy resources and obtained an educated positive answer. In these bargains, however, Russia tries to maximize its benefit by asking for a share of distribution networks, as was the case with Greece and Serbia. The argument of mutual energy dependency has been severely blunted as Russia is thinking of diverting resources to Asia., following mere economic considerations. China and India are as a matter of fact as interesting clients as EU, calling for a far more complication-free treatment. To tie Russia to EU, this is no path.

On the other side, the summit made clear the possibilities of smooth cooperation in terms of economic, environmental, social projects. An example is the implementation of an electronic customs system in Finland and Russia to ease cross-border commerce. The projects is framed in the Northern Dimension, an Organization parallel to EU that is focused on more concrete matters, as to promote cooperation in economic, environmental, social, and security matters.

This is the reciprocative ground where to build a neighbouring policy. Basically Russia needs EU technology to diversify its economy, meeting EU interests in the form of FDI and Joint ventures.

The argument is that Russia needs to diversify its economy rather than simply tying its resources to EU.

We should see if the message was understood in the July 4th Brussels meeting.

Sudan´s "hundred-years war"

Sudan´s government uncooperative conduct continues as it ignores International Criminal court recommnedations. In June 19^th a declaration demanded the handing over of a government minister to be tried at the Hague in relation to Darfour atrocities, which was matched by Khartoum refusal. The “Darfour war” witnesses the south fighting against the authoritarian north in demand of more equality and justice. To the great entaglement of the situation, the land has oil, is demographically booming and agriculturally starving, as the desert keeps swallowing villages and fields. Civil war, separatism, displacement of people and pillaging is endemic.

In the struggle are now engaging other countries, Chad and Uganda, drawn in by the huge displacement of people that affects their own economies, as jeopardizes the uneasy balance of water and land resources.

Notoriously, the region itself is extremely volatile. More and more countries are falling or being dragged into the region features: instability and famine. As said, neighbouring Chad and Uganda are meddling in the power void of the Sudanese failed-state fall as it was the case between Eritrea and Sudan itself and is the case between Ethiopia and Somalia. The picture is similar to other parts of Sub-Saharan Africa, only that the region hosts a lot more conflicts than elsewhere in the continent, and death toll is the highest. What is more important, the resources conflict pattern is here more apparent and produces interesting field-data. As the Sahara draws closer to villages and towns, agriculture and herding knee in front of pillaging and looting as sorts of economic behaviour.

According to a late UN-led peacekeeping forces official, West Darfur crisis seems so interrelated with Chad situation that a single surgical solution seems impossible. While Sudan fends off accusations of supporting Chadian rebels, Chad makes the same over rebels in Darfur, with reference to the Justice and Equality Movement (JEM) attack of Khartoum in early May. Intelligence seems to validate both accusations, and it demands for a broader UN mandate, perhaps linking it also to the UN mission in CAR (Central African Republic).

Conflict in Abkhazia - 19th June

June 19th - It is a rather complex situation that we encounter in Georgia in these days. Almost daily the news-agencies (I refer to RIA Novosti) report the unreportable. Timid moves and delicate choreography of armies and governments ebb and flow over a strip of land that is as little populated as Jersey Island (round the hundred thousand). It is now on the verge of a burst since the Georgian government is facing the Abkhaz stubborn intention to host a Russian military base. The Russians are seen as the only strategic partners, both in military than in economic terms. The factual pretext to call in the Russian army was engineered in recent days as a railroad reparation. In doing so, Russian army effectively penetrated in Abkhazian territory, which is Georgian disputed territory. A few explosions are reported to have burst yesterday, with no victim, but bearing the message that the move will be somehow matched, if not withstood.

Escalation in the Caucasian republic has been building since 1991. The war within the newborn Georgian republic (waged by the Grusians and their ethnic minorities) left down 10.000 to 30.000 casualties and a considerable number of displaced people. The conflict froze in 1994 to a unstable solution of non-interference in the Abkhazia and South Ossetia province, in so resembling the statute of Transdnistria and Republika Srpska. These lands were informally declared indipendent, only to come handy in NATO-Russia confrontation.

Recently, since Kosovo´s indipendence declaration, the dormient conflict flared up due to regained confidence on georgian side of an US informal backing. Georgian president committed his credibility to the quest for the re-unification of the mothercountry and the establishment of the sovereignity over every stretch of land. This came at odds with the non-written norms of the Caucasus, according to which its better never to break the spell of stability in the name of factual governability.

Some game rules in Hyperboreastan,

Kazakhstan 2008. ENI delays again the completion of Kashagan field, ensuring Kazakhstan space for other takeovers or bigger compensation. Such may be the penalty for a delay. The italian oil company revised the timetable of the Kashagan oil field, from 2011 to 2012-3. The delay comes to be the second in a row, as the oil field should have become operational at first by 2008. KazMunaiGaz was that time compensated with a doubled partecipation in the consortium, from 8.4 to 16.8 %.

Kashagan oil field was detected in 2000, one of the biggest discoveries since 30 years. It was probed by ENI. Due to the field´s Central Asian location, European companies were eased to make business, banking on the non- aligned politics pursued by Europe towards the Greater Middle East. American companies, conversely, had to comply to the policies of the Pentagon towards Iran and Lybia, Algeria.

As for 2007, Eni, Exxon Mobil Corp., Total SA and Shell all got to hold a 18.5 percent stake, while ConocoPhillips had 9.3 percent one. Kazakhstan’s national oil company, KazMunaiGaz, and Japan’s Inpex Corp. each owned 8.3 percent. At the times Kazakhstan did not have know how and the political weight to oppose foreign companies from reining in and its national gas company, Kazmunaigaz, did not have the experience and the sand to bargain with western firms.

useHouse hhhPerhaps the example of Russia was emblematic for the Kazakh state run energy company. Shell was accused to be environmentally uncompliant (alleged negligent installation work, safety breaches andviolation of the pipeline route plan) and was pushed to revise its contract. Gazprom stalks foreign companies by objecting on environmental violations, delays and price of delivery. The case of the Sakhalin II oil field, that was ceded by Shell to Gazprom (infact it was ceded a 50 + 1 stake) was incumbent. Experts allege the goal for KazMunaiGaz is to achieve 40% of the stakes.

As for now the status of negotiations is “still open”. Given the delay, KazMunaiGaz rise in the stakes my be at hand.

Azerbaijan, the shy beauty by the sea...

The Caspian sea has been the place where oil was first discovered and studied, the first derricks built, the first fortunes ammassed. Robert and Ludvig Nobel made their huge profits, a small percentage of which was later to become the Nobel prize fund, after Azeri olifields were nationalised by the Soviets.

It is now a landlocked area which hosts 10.2% of world oil reserves but 40.5% of non-OPEC reserves. The resources of the area stem from basins that is right under the south chunk of the sea, from which every shoreline country profit. The Post-Soviet countries that do most of the extraction are therefore Turkmenistan and Azerbaijan, significantly the only two oddballs in the otherwise organized Central-Asia scenario, allegiance-wise speaking.

Sitting on consistent oil and gas deposits, they are sole players that pursue the best bid. Nowadays Azerbaijan is courted by EU as the source of the Nabucco gas pipeline, and by America for the Baku-Tbilisi-Ceyhan pipeline. Fact is Baku is also in qualified talks with Russia state-owned gas giant, Gazprom, and is supposedly engaging indifferent talks to be able to obtain higher bids from the interested EU, Turkish, American and Israeli companies that have respectively stakes in Nabucco and Baku-Tbilibi-Ceyhan pipeline. This technique of exploiting Gazprom as a Bogeyman is already used by Nigeria (please see the following Analysis). The object of discussions is the Shah deniz gasfield, whose output is 20 billion cubic meters and is forecasted to raise to 50 bcm by 2020. The site is estimated to contain up to 1,300 bcm.

[...] Gazprom's previous greed may come back to haunt it. The company offered the European price for Azeri natural gas less the "costs of transportation" to the consumer. Azeri officials, who remember Transneft's "carrying charges" on the Baku-Novorossiisk pipeline, no doubt feel Western offers have additional appeal because of their transparency and the fact that engagement with Western companies produced the country's current prosperity.

On June 4 U.S. Deputy Assistant Secretary of State for European and Eurasian Affairs Mathew Bryza, speaking at the Caspian Oil and Gas-2008 conference in Baku, could not resist floating the idea that perhaps Gazprom did not have enough gas to fulfill its European contractual obligations, drawing an immediate aggrieved riposte from Gazprom spokesman Sergei Kuprianov, who sniffed, "Gazprom has always performed its contractual obligations, and there is no doubt that it will do so in the future," adding, "Gazprom's gas production in Russia has increased considerably over the past five years, unlike that of many other producers, including in the U.S."

(excerpt from Analysis: Gazprom wants Azeri gas By John C.K.Daly, UPI International Correspondent)