Closed circle against Georgia

From the Editorial Office

September was extremely important month from the point of regional events.

A circle closed this autumn – Georgia-Azerbaijan-Armenia-Turkey might do a serious harm to the country’s economy and geopolitics. After long years of arguments and failed attempts of negotiations, Turkey and Armenia might bridge a gulf. We are talking about the meeting of the heads of these two states (sources: www.expert.ru). Yerevan and Ankara are starting international political consultations in order to work out two documents that imply establishing of diplomatic relations and protocols of development of bilateral relations. The mentioned negotiations were initiated by both parties with the mediation of Switzerland. The document must give a foundation to normalization of the relations between the two countries. Political consultations will be completed in 6 months and designed document will be introduced for ratification to the parliaments of both countries.
hat changes were noticed in the relation of Turkey and Armenia? Controversy between these two countries is well-known. Recognition of genocide by Turkey and arguments on Mountainous Kharabagh, together with additional territories in seven regions (quite often only Kharabagh issue is discussed in Media, while disputable territory covers seven regions. This was Russia is attempt to provoke Azerbaijan, but Azerbaijan did not get angry enough to get involved in the war). Turkey postponed reconciling this dispute and it is offering Armenia reestablishment of diplomatic relations without any ultimatums that necessarily will be followed by opening of the borders.
Events are developing in accelerated pace. Armenian president Serge Sarkisian is invited to the meeting of football teams in Ankara, on 14 October. Turkish party is declaring that (with this visit) so called “cold-war” between two countries will be ended. It is welcome when two hostile countries are making steps toward each other. However, these steps might bring three problems to Georgia: First, Georgia will not be a transitive country between Turkey and Armenia; Second, offended Azerbaijan might say no to accomplishment of Nabucco project, as the pipeline is passing through Turkish territory, or strategic directions will be overviewed; Third, if some specific problems will be regulated, Armenia is considered in perspective as a transitive country.
America is considering Azerbaijan as a strategic partner not only for oil – America is using airport in Azerbaijan for the flights to Afghanistan and other directions. Well-known Matthew Braiza has been appointed as USA ambassador to Azerbaijan. As co-chairperson of Minsk Group, Matthew Braiza has straight directive to get frozen conflicts of Kharabagh conflict and seven regions off the ground. Russia is not interested in either settlement of Mountainous Kharabagh or friendship and strengthening of Armenia and Turkey. Turkey, on its part, reckons that it might have the same claims in Caucasus region of its historical influence, as Russia. If Russia’s argument is that it was a metropolitan country of these territories over 200 years, Turkey might declare the same, as these territories were considered as the field of its influence for ages. Turkey wants to have Armenia under its influence, it desires to carry out effective peace policy in this region. Russian diplomacy debars this by all means.
The most important aspect is that the process of opening Turkish-Armenian borders might be developed in accelerated pace – none of the experts were anticipating this. Armenian economy is in need of a border opening like a fish out of water. About ten years ago, in village Kartsakhi (last point of border), Armenian diaspora was demanding opening of the border with the help of Armenians from Yerevan. This meant establishing of customs station at Armenian borders that would encourage establishing of tight relations with Turkey and rapid development of trade. Tourists from Armenia flooded Turkish resorts this summer, of course travelling through Russia.
Once subject of big argument genocide recognition and Mountainous Kharabagh issues are settled and tendencies of establishing closer relations are noticed. Turkey gave up any ultimatums and this means that shortest way to Europe is opening and Georgia will lose majority of transported goods. Transportation infrastructure around Ararati Mountain between Turkey and Armenia is not so developed to pass such volume of goods that would decrease load on Poti port. However, one can assume that Armenia will be important partner for Turkey and for Georgia this implies reduction of commodities exchange. With this step Turkey proclaims Armenia as a major player in the issues of independent energy corridor formation of Europe.
At the same time, serious events are developing in another end of the region. President Medvedev once again summoned heads of Kazakhstan, Turkmenistan and Azerbaijan (Sources: www.expert.ru). Presidents Ilham Aliyev, Dmitry Medvedev, Nursultan Nazarbaev and Gurbangul Berdimukhamedoc met in Kazakhstan and discussed a thorny subject – division of Caspian Sea. As it is known, above mentioned countries together with Iran are trying to divide Caspian Sea among themselves. Iran which is a holder of 18% of coast line is claiming to divide seabed according to coastline. This is unacceptable to the rest of the parties. Iran will not agree to divide Caspian seabed until it receives at least 20% of it. Sea at the Iranian side is deepest and poor. Therefore, Russia summoned Caspian Sea basin countries without Iran’s participation. With this step among other subjects Russia intended to discuss the theme of gas transportation with the big player countries in the oil and gas issues.
Russian policy is clearly seen in energy issues, as it is intervening in business and politics with gangster methods. Russia used this meeting for negotiations with Turkmenistan’s president concerning restoration of gas supply that was stopped after famous accident at Russian-Turkmen borders.
From this perspective it is obvious that this breakdown was not accidental. Russia was not satisfied with the gas price of $300 per thousand cubic meters of gas. Gas supply is not restored up to now. Turkmenistan is not giving up its positions. Of course, Russia spoilt with European price on gas – $540-545 per thousand c/m (today’s price is $380-370 per thousand c/m) does not want to pay more to Turkmenistan. Thus, Russia simply is not repairing pipeline. Explosion of pipelines is quite familiar theme for Russia as in case of Georgia. In this way, Russia showed to Turkmenistan that there is no other way for it. Today, Turkmenistan is supplying China with 40 billion c/m of gas by the pipelines that are more or less operative. Turkmenistan increased capacity of the pipeline passing through Iran by 6 billion c/m. Annual production of gas in Turkmenistan is 70 billion cubic meters, major part of the gas was supplied to Europe by means of Russian Gazprom. 47 billion cubic meters of gas was exported to Russia in 2008. It was planned to export 51 billion c/m of gas in 2009 (annual gas production was planned to increase to 75 billion c/m). At the end of the year, completion of China pipeline and increase of Iran pipeline capacity might not compensate the volume of gas exported to Russia. Russian gangster methods are the main reason of this.
Official reason of summoning four countries was division of Caspian Sea. However, in reality Russia once again reminded Azerbaijan about its obligations. It allowed Azerbaijan and Kazakhstan to agree on not participating in Nabucco project. In the recent period, Turkmenistan’s position toward Nabucco became warmer and more businesslike that is an issue of great concern for Russia. With this meeting Russia tried to play a role of elder brother with Kazakhstan and promised it a protection from Iran. However, in exchange Russia demands support of the projects that are of its essential interests.
Iran severely criticized this meeting of four countries. Iran summoned ambassadors of four countries and gave them a note of protest, where it strictly condemned separatist meeting behind Iran. Iran, like Russia has ambition of regional leader and desires to gain role of a major player in Caspian Sea issues.
Both meetings are containing danger for Georgia as they contradict with Nabucco project. Russia constantly tries to get gas projects from these four countries, join them with South Stream from Novorossiysk and thus sink Nabucco project.
Nabucco project has the only problem – joining of Turkmenistan. Russia was very concerned with serious agreements and victories reached on Nabucco project in summer. Russia had separate negotiations with European countries and it reached first victory in this game. It will sell 10% of Gasprom to French energy giant that on its part promised to finance South Stream project the value of which is more than 9 billion Euros. Despite the fact that France is not participating in Nabucco project, its joining to South Stream project makes it more valuable, under the conditions if the three countries that Medvedev held negotiations with, will support the mentioned project.
These themes are quite thorny for Georgian economy as they endanger our biggest investment of the last decade – Nabucco project. Georgia might become a country through which will pass 30 billion c/m of gas. Therefore, it is important to accomplish Nabucco project before settlement of Turkish-Armenian relations. We have one advantage – Baku-Erzrum pipeline is already a part of Nabucco project. However, even if one branch of the pipeline passes through Armenia, our economic effectiveness will be considerably decreased; moreover, considering the fact that Armenian way is much shorter and economically profitable.
Simultaneously, Russia continues to develop North Stream project into active phase. Angry Russia already has declared that it would stop North Stream near Petersburg and construct station of liquid petroleum gas. However, it has already received ecological permission from corresponding institutions in Finland, Sweden and Germany. Russia is awaiting permission from Danish Kingdom. The permissions are needed for 1200 km. length gas main that will pass Baltic Sea bottom. This is a big gas main of 27.5 billion cubic meters capacity. Gas main must be put into operation in 2012. Project value is 7.5 billion Euros. Russia was leading serious negotiations with European banks and it managed to receive part of the necessary financing. Putin brought this project to the final stage by the negotiations with Dania that were restored in September. Documentation details are decided now with direct intervention of Gasprom and participation of Dania. Thus Russia will have a green light for construction of North Stream project that will be a major step made in Europe’s energy security issues. This is a way from Saint-Petersburg to Germany. Holland and Dania are participating in the project. Negotiations are held with Sweden and in case if Russia receives the financing and Europeans get fully involved (excluding Germany that was involved from the start) this will do serious damage to economy of our country. This will be a first attempt to deliver gas bypassing traditional transit countries – Ukraine, Belorussia, and Poland. This once again proves that Europe is not united and it doesn’t have common energy policy. Such European policy damages the countries like Czech Republic, Slovakia, Poland, Rumania and others, as their interests are considerably different.