Thursday, August 14, 2008

The West flees from Georgia, Russians achieve their goal

There are two major energy pipelines owned by non-Russian foreign consortia running through Georgian territory: the Baku-Tbilisi-Ceyhan pipeline, and the Baku-Supsa pipeline. While the former pipeline had been shut down coincidentally a few weeks before the recent fighting began (supposedly because of sabotage by Kurdish separatists, but I have my doubts), the Baku-Supsa pipeline was still operational. And though the pipeline was not damaged in the fighting, BP (the operator) has shut down the line as a "security precaution."

From the NYT, analysts and oil bosses believe the incident has destroyed any chance of more energy pipelines in Georgia:

“It is hard to see through the fog of this war another pipeline through Georgia,” said Cliff Kupchan, a political risk analyst at Eurasia Group and a State Department official during the Clinton administration. “Moving forward, multinationals and Central Asian and Caspian governments may think twice about building new lines through this corridor. It may even call into question the reliability of moving existing volumes through that corridor.” [...]

But Mr. Verrastro, a former senior executive with Pennzoil, said it would be very hard now to build a new Western [natural gas] pipeline.

This was Russia's intention from the start: to destabilize Georgia and make foreigners think twice before investing money in Georgia, an alternative route for directing oil and natural gas across the Caspian Sea without going through Russian territory. Russia didn't need to damage actual infrastructure (though it looks like they might have at least tried in both Poti and the crucial BTC pipeline) – all they needed to do was increase the risk premium that investors saw in Georgia, and their goal is achieved – to channel all the oil and natural gas they can through their own territory.

This is all part of the New Great Game, a fight between Russia and the West over control of Central Asia's increasingly important energy reserves. Russia has been quite active in the Caucasus, fomenting tension that will scare off Western investors, such as its recent antics in Nagorno-Karabakh – arming and encouraging both the Armenians and Azerbaijanis, hoping that they'll eventually go to war over the disputed territory. Such a war, like the current one in Georgia, would surely set back Western energy companies' plans to use the countries as energy conduits to avoid Russia.


Anonymous said...

Did the West's dogs give Russians their fleas? Or did Russian's dogs give Georgians their fleas?


Raționalitate said...

Ha – point taken. I really should read my posts before I post them...