The Battle with Russia in Georgia over Energy Flows

Writing in the Boston Globe former US ambassadors to Georgia William Courtney and Kenneth Yalowitz warn that the West must be more aggressive in confronting Russian imperialism in Georgia, since it is a crucial part of Russia’s effort to weaponize energy resources in the new cold war:

RUSSIA’S INVASION of Georgia in August inflicted a potentially severe blow to global energy security by threatening export routes for Caspian energy. Russian President Medvedev’s declaration on Aug. 31 that Moscow has “privileged interests” – read, a sphere of influence – in bordering countries underscores that Moscow’s aims stretch beyond Georgia. Among the targets are the major producers of Caspian energy – Azerbaijan, Kazakhstan, and Turkmenistan.

Russia seeks a de facto veto over Caspian energy. This is important because the Caspian Basin holds some of the largest reserves of conventional oil and gas in the world after the Persian Gulf and Siberia. Moreover, Georgia is a pivot of the “new Silk Road,” a vital link to world export markets avoiding Russia’s control.

Over 1 million barrels of oil per day are shipped from Azerbaijan and Kazakhstan across Georgia to its Black Sea ports, and via the large Baku-Tbilisi-Ceyhan pipeline to the Turkish port of Ceyhan on the Mediterranean Sea, where supertankers operate. Exports through Georgia were to increase to around 2 million barrels per day, and could eventually include significant volumes of natural gas. With world oil consumption at 85 million barrels per day, these volumes can affect world supplies and prices. Moscow wants Caspian energy to flow only through channels it controls, and hence it wishes Georgia to be permanently vulnerable. Russian military forces have shown they can roam in Georgia and block its ports.

Is Caspian energy lost to Russian domination? Consider three questions. If Russia opposed a pipeline through the South Caucasian countries of Azerbaijan and Georgia, avoiding Russia, would investors fund it? If Russian forces chose to interdict a pipeline there, would anyone stop them? If Russian gunships threatened energy shipments moving across the Caspian Sea from Kazakhstan or Turkmenistan to the South Caucasus, would they take place?

If the response is “no” – almost surely the answer today – Russia wins control of Caspian energy. Why would this be a serious defeat for the West?

Since the Soviet collapse in 1991, the United States and Europe have strongly supported the independence, sovereignty, and territorial integrity of the new states of the former Soviet Union. They have vigorously encouraged the development of Caspian energy. US and European companies have spent tens of billions of dollars on oil and gas exploration, production, and export pipelines across the South Caucasus and Turkey. These pipelines complement routes through Russia.

US and European policy has two key aims: prevent Moscow (or Tehran) from exercising a choke hold over Caspian energy, and reduce Europe’s already high dependence on Russian energy.

The correlation of forces is hardly all in Moscow’s favor. The international community is outraged at Moscow’s anschluss of South Ossetia and Abkhazia, and is pressing Russia on its policy aims. Western leaders have voiced support for Georgia, underscoring its strategic location, developing democracy and Western orientation. Energy investors – already dismayed by the shabby treatment of Russia’s biggest international energy investor, BP – now see Russia as an even riskier place. The steep declines in Russia’s hard currency reserves and stock market, even before the recent international financial turmoil, reflect this.

Natural resource endowment and geographic proximity dictate a voice for Russia at the energy table. The dialogue can prosper, however, only if the United States and Europe thwart Moscow’s bid to muscle its way to domination of Georgia and Caspian energy.

Immediate, and long-lasting, steps are required. The United States and Europe should assist Georgia and Caspian energy-producing countries with defensive security needs. EU peace monitors are now on Georgian soil and, hopefully, speeding Russian military withdrawal. The United States and Europe should support the building of alternative routes for Caspian oil and gas to reach international markets. They should examine reciprocal treatment with Russia on energy-sector investments. Finally, they should reassure Turkey against the new threats to its vital role as an energy-transit corridor and build on its potential to contribute to European energy security.

These steps are a tall order. Yet if Russia remains authoritarian and imperious, the United States and Europe must adjust to deal with the new energy realities.

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