Saturday, January 24, 2009

Georgia and Russia: Intersection of Energy and Foreign Policies

During the Fall 2008 semester, I was part of a group that analyzed US policy options in responding to Russia's invasion of Georgia.  The team members are listed at the end of this post by way of attribution. 

The net-net of the analysis yielded very few reasons for the US to get more involved in what is essentially a regional conflict involving ethnic histories stretching back hundreds of years.

However, we found one fact that led us to recommend that the US maintain a low profile presence in the area: as of mid-2006, Georgia is now home to the only non-Russian pipeline that can get oil or natural gas out of the areas east of the Caspian sea.  This is more than mildly irritating to the Russians.

Here is a link to a map for those not familiar with the area:

The pipeline is the Baku-Tbilisi-Ceyhan, and it runs through Azerbaijan, Georgia, and Turkey (in order to not run through Iran).  It is a large capacity pipe, capable of transporting up to 1.1 million barrels per day (Dr. Webber, the maps don't use any of the standard units you showed us on Thursday!).

All other routes to get that oil out transit through Russia.  We have seen two situations in the past few weeks demonstrating how willing Russia is to use that logistics dominance to control behaviors of other countries.

We found that British Petroleum is the largest investor, owning a 30% stake in both the pipeline and the reserves in the largest fields under the Caspian.  U.S. oil interests in total were less than 25%.  The rest was held by a variety of countries, with Europe in total having a nearly 2/3 stake in the pipeline and the Caspian region's oil fields.

Our conclusion was that while the US has an interest, we do not possess the largest interest. Therefore, our role should be one of awareness and indirect support.  We trained 2,000 Georgian troops on how to protect the BTC pipeline in 2002-2004.  That is the type of assistance our analysis found we should continue, but not expand.

I found it interesting to see the direct and real-time interaction between our energy policy and our foreign policy.  They constantly interact and impact each other.

We also found it to be yet another reason that alternative energy and other methods to reduce our need for oil coming from unstable regions such as this one needs to be a high priority item for the Obama administration.

Credit and thanks to my team mates on this project: 
Jessie Neufeld (Law)
Kevin Gong (LBJ)
Joe Harvey (MBA)
COL John Kilgallon (Fellow)
Jonathan Witham (MBA)

Becky Taylor (LBJ)


clarita said...

What you say Becky about interaction between ebergy policy and foreign policy is so true. What you say about oil travelling in Georgia makes me think of gas travelling through Ukraine.

Two weeks ago, Russia stopped the alimentation of the gas pipeline of Ukraine. The consequence was that 17 countries of the European Union whose gas was forwaded by Ukraine were touched by the crisis and did not receive anymore gas.

European countries got similar problems than the US with Russia and foreign policy. As you say Becky, we should reduce our need in oil or gas from unstable regions because by not doing it, the government cannot say without thinking to the energy consequences what they really think to situations like the invasion of Georgia by Russia...

Toby said...

Becky, I think you and your team offered sound advice with respect to the posture U.S. should adopt towards the South Ossetia invasion by Russia. However, "indirect support and awareness" of the Georgian situation will not, in my opinion, be adequate for the new Obama administration to adopt in the future. This is due to the ever-growing danger Russia poses to global security (economically--energy related--and militarily).

President Medvedev and PM Putin can not hide their re-sovietization intentions. Yes, Russia's desire to control natural gas flows ($$) is part of their cartel plan (ref: their involvement in the Gas Exporting Countries Forum, including Iran, Qatar, Algeria, and Venezuela). But, the invasion of S. Ossetia, the arms deals with Iran and Venezuela, and the naval exercises with Cuba and Venezuela in the Caribbean are not solely symbolic gestures or "peacocking" by Russia. These acts, unmistakably, illustrate the malicious intentions of the Russian leaders to exert geopolitical power. We in the U.S. can not sit back and dismiss Russia's behavior as just a show of force. We need to watch them carefully, and need to develop a comprehensive plan to deal with them aggressively (especially with regard to their possible stranglehold on the energy sector--enter: Ukraine and western Europe v. Russia in gas supply).
Aside: It is my opinion that, even though Putin and Medvedev are interested in the gas-rich area of Georgia and Azerbaijan, the invasion of S. Ossetia was used as a way for Putin to provide a legitimate illustration to "his" Parliament for the need to enhance Russia's military armament and training (funding ($$) necessary for Putin's desires to expand Russia's "sphere of influence").

combustible said...

Becky, your blog post was an enjoyable read, and you present a very intriguing idea—that energy is the driving force behind our international relations.

Although most of the oil in the BTC pipeline is headed for Europe, the world market is so tight that any disruption in this pipeline surely affects the supply headed toward the US. Therefore, our federal government maintains an interest in the security of the pipeline. Of course, our government uses the façade of protecting its democratic allies abroad. On August 11, 2008, President Bush made a statement [1] on the situation that included the following: “Russia has invaded a sovereign neighboring state and threatens a democratic government elected by its people. Such an action is unacceptable in the 21st century.”

I agree that developing sustainable, alternative sources of energy needs to be an extremely high priority on the Obama administration’s list. Finding viable sources of energy that cannot be affected by instabilities in foreign nations or by despotic tyrants would be a vital step to securing our national interests and ensuring national security. President Obama made this a point in his inaugural address: “…each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.” I feel somewhat encouraged that our new administration may take this very seriously—enough so to make dramatic pushes for increased innovation and energy independence. In office for only a few days now, our new administration has drawn out a brief energy agenda for the citizenry to scrutinize [2].

National security is, in my opinion, the top priority for the office of the President of the United States. Furthermore, energy is intimately tied to our national security as a good supply of it ensures continued strength of our economic status (despite the current economic downturn we have been in, as of late). This country rose to become the greatest superpower in human history, and it did so through advances in technology that led to increases in productivity—none of which would have been possible without harnessing the energy derived from coal and o&g.

That’s why energy issues dominate our foreign policy decisions. As a nation, we do not want to give up the title of “World’s Greatest Superpower” to someone else. At the same time, other countries are seeking to strengthen their own stature in the world community. In doing so, they find themselves demanding a greater and greater supply of energy. What this boils down to is a worldwide struggle for the same pool of energy. Thus, our international relations are determined by the energy market. As nations in a global community, we are all fighting over the same pie. As Daniel Plainview so succinctly put it (There Will Be Blood, 2007), we are all trying to “…drink [one another’s] milkshake” so as not to run out of our own.

[1] -

[2] -