Sunday, January 25, 2009

Russia, Georgia, Ukraine

As a follow-up to the initial post about Russia/Georgia by Becky, and the comments by clarita, Toby and combustible, I thought it might be useful to look at the sources of post-Soviet Russian foreign policy not just in the Caucasus but also in Ukraine. The August war in Georgia and the seemingly annual cutoff of Russian gas to Europe show the importance of these areas to energy, and thus national, security of the United States.

At the heart of Russian foreign policy after the dissolution of the Soviet Union is the attitude of Russia towards the former Soviet republics. To wit, the former Soviet republics are not thought of as foreign countries, but rather as areas comprising the 'Near Abroad' -- lands of non-Russians that have been under Russian control and domination since the Mongol hordes were booted out in medieval times and Russian tsars from Ivan the Terrible, Peter the Great and Catherine II steadily expanded the realm across 1/6 of the earth's area. To a typical Russian nationalist, of which Vladimir Putin and his associates are (along with wanting to restore the foreign and domestic might of the Soviet Union, but more on that below), Georgia is not a foreign country, but a lost province. Ukraine is not an independent country, but the origins of the Russian people (the Russian state and Orthodox Church began in Kiev, capital of Ukraine), so they have no natural ability to claim sovereignty over anything that belongs 'by rights' to Russia.

So after 1991, the Soviet Union fell apart, leaving behind the constituent republics to claim sovereignty over their own borders and largely to claim whatever (good, bad, ugly) Soviet infrastructure was in their territory. For the newly-independent countries around the Caspian Sea (particularly Azerbaijan and Kazakhstan), this was the golden opportunity to sell prospecting and drilling rights, leases and concessions to foreign oil companies for big money (the best book on this subject is probably The Oil and the Glory by Steve LeVine, who also runs a blog by the same name). Yet for Russia this was a period of great calamity as law and order broke down and insiders were able to exploit connections to claim much of public natural resource sectors as private prizes. Enter Vladimir Putin in 2000 who—very long story short—used   state coercion to consolidate his own position and bring the private owners of natural resources to heel; he did this by brokering a deal that allowed these 'oligarchs' to keep their assets so long as inter alia they helped the national gas company (Gazprom) and the national oil company (Lukoil) become the dominant companies in their respective commodity sectors.

As commodity prices rebounded at the beginning of this decade, Putin took a view towards revising the 1990s: at a time of weakness, outsiders (particularly the US and American oil companies) exploited Russia, while former Soviet republics took advantage of decades of Soviet infrastructure and investment without adequate compensation or including Russia in future plans. Specifically, constructing the Baku-Tbilisi-Ceyhan pipeline (as Becky rightfully pointed out) was an affront to Russia because it cut them out, and Ukraine charging Gazprom transit rates to move gas to Europe while still paying Soviet-era subsidized prices to purchase gas was totally ungrateful. And as these two countries had the temerity to move towards NATO membership, that was the final straw: Putin began moving to reverse the foreign policy losses of the 1990s and reassert control over oil and gas transit resources (as the main source of revenue).

In Georgia, Russia had been acting as a peacekeeping force in Abkhazia and South Ossetia to protect those areas against the Georgian central government, but had a stake in the outcome as they began issuing Russian citizenships in those areas. This allowed them to intercede in any conflict by claiming the defense of Russian citizens abroad. As for Ukraine, they claimed that cutting off gas in the middle of winter was the result of Ukrainian inability to compromise on the price of gas; the ‘commercial dispute’ leaving Eastern Europe shivering. This was a commercial dispute in the way that the Palestine/Israel issue is about property values in southern and central Israel. The intent of both actions was to destabilize the Georgian and Ukrainian governments and warn them away from doing anything further to displease Russia and its interests. The message to the rest of the world was that the BTC pipeline was not a safe bet for Caspian oil, and the Ukrainian gas network was also unreliable at best; Russia’s proposed North Stream pipeline (under the Baltic Sea to Germany) and South Stream pipeline (through the Balkans to Italy) were the only sure bets.

I respectfully disagree with Becky and her colleagues’ recommendation of a lower U.S. profile in the Caucasus region. U.S. foreign policy objectives regarding Russia and energy should be to support alternative pipelines (such as BTC and the proposed natural gas pipeline Nabucco) more openly and vigorously for the purpose of balancing Russia in the Caucasus region. These countries in the region (Central Asia, Caucasus, and southeastern Europe) have no other foreign policy levers to protect themselves against Russia. Russia will and has signed individual deals with these countries to their collective detriment. While the volumes of oil and gas reaching the United States is relatively low, the importance of this region is that its exports are critical to Russia, a prime strategic competitor to the U.S., and can provide enough capacity to reduce the bargaining power of OPEC. As combustible noted, this is the matter of US prestige and diplomatic capacity in the entire region.


Yuval said...

Sorry this looks awful.

combustible said...

Extremely informative and very enjoyable post.

Franklin said...

There is lots of good info in this post. I agree that Russia is very much looking for ways to antagonize western (or western affiliated) countries in an effort to restore its relative strength and prominence, but I wonder if the country's aggressiveness might dissipate quite a bit simply because of the 25% drop in the value of the ruble over the last three weeks. In combination with the 70% drop in the price of oil (and the general contraction of the capital markets) it seems like a significant drawdown in the country’s foreign currency will result. If this is indeed the case, do you think Russia might find itself too preoccupied with domestic matters to pursue such provocative policies along its borders?

Zoe said...

Nice post, Yuval. I was just reading a New York Times article,
"A Threat to Putin's Big Plans,"
and in a discussion of Russia's faltering economy, the author stated, "...Mr. Putin has instead made a scapegoat of the United States, saying it was at the heart of Russia’s crisis, rather than Russia’s over-reliance on the export of natural resources." It seems like the author is attributing Russia's problems to the current low oil price and an overreliance of Russia on exporting oil - do you think that's valid?