NGOs flee Chechnya

August 18, 2009

Pledges by Chechen president Kadyrov to track down the killers of relief workers Zarema Sadulaeva and Umar Dzhabrailov are not earning him any plaudits from the human rights community. Investigative-journalism newspaper Novaya Gazeta and human-rights watchdog Memorial have both suspended operations in the republic due to the “lack of security.”

Memorial specifically cited death threats its workers received and incidents of unknown people following three workers throughout the month of July. One of those workers was Natalya Estemirova.

The two groups are not alone. Given Estemirova’s death in July 15 and this double murder less than six weeks later, rights groups in general feel certain that the Chechen government either cannot, or will not, protect them.

The day of the latter double murder, the staff of the Helsinki Group issued a statement lamenting the mortal danger confronting Chechnya’s human-rights workers: “These murders became the latest proof of the authorities’ inability to provide elementary security for its citizens… federal and regional authorities exhibit a criminal inaction.”

The NGOs’ decision to evacuate follows new revelations is not surprising. It follows new revelations that Sulayeva was beaten and tortured before her death. Moreover, the Chechen government’s behavior since the slayings doesn’t give NGOs any reason to lend it their trust. Kadyrov sued Memorial head Oleg Orlov for $10 million last week for telling an audience that Kadyrov was was responsible for Estemirova’s death.

And a recently aired video shows Adam Delimkhanov, a Kadyrov ally and Chechnya’s representative to the Russian State Duma, asserting that “rights activists in Chechnya are helping the criminal bandits” and that they will meet untimely ends: “Each of these [rights activists], be he a Chechen or an Ingush or someone else, must know that they will have to answer for their words.” When did Delimkhanov utter these words? Just 11 days before Estemirova’s death.

Kadyrov’s government has given NGO workers ample reasons to think that it will allow violent acts to befall them, if not commit the violent acts itself. Since they cannot advance human rights if they are dead, the only course of action for them to take is to leave Chechnya. That may well be what Kadyrov and company wanted all along; more free reign to imprison and execute out of sight of watchful eyes. The NGOs will leave and the status quo of uninhibited police state will be upheld.

But what good has this status quo done Chechnya to date? Uninhibited police state has been Chechnya’s political reality for the last eight decades, first administered by Russia and then by Russia’s Chechen proxies. It achieved Chechnya reaching the sad state it is in right now. Like anywhere else where they have been tried, oppressive governments who are heavily backed by foreigners tend to breed violent domestic opposition. And when the governments get more oppressive, the opposition will get more violent.

The Chechen authorities’ obvious contempt for human rights groups is ample proof that they plan to go the way of more oppression. This may be a politically expedient strategy. But it’s also a guarantee that the mayhem that is Chechnya’s present-day situation will continue into the foreseeable future. Brutal government tactics will inspire more people to take up arms against the government. Which will fuel still more oppresive government tactics. And so on ad infinitum, government and opposition fueling each other’s growth and raise each other’s body count in a neverending, headline-generating cycle.


A Wolf in Security Officer’s Clothing

August 18, 2009

No one knows the identities of the five men who abducted and murdered relief workers Zarema Sadulayeva and Alik Dzhabrailov on August 11. But Chechen president Ramzan Kadyrov is apparently certain that they were separatists.

Bandits… trying to create an environment of general fear and suspicion to get society to stop working together to rebuild the republic,” he said Friday.

Kadyrov noted that Dzhabrailov had once been a member of a militant group before serving four years in jail and leaving the resistance. His former compatriots may have thus wanted him dead as a result of some “blood feud.”

Hence, continued Kadyrov, the  operations against the militants will intensify and the killers will be found. It “will be a matter of personal honor.”

But Alexander Cherkasov of Russian nonprofit group Memorial places his suspicions somewhere else: on Chechnya’s security services. He told the Moscow News on Monday that he saw an “obvious” link between the five abductors and Chechen law enforcement.

Cherkasov explains that according to eyewitnesses, the men “politely” identified themselves as members of security. And in fact, three of them were wearing security fatigues. More curious, all five had their faces uncovered uncovered—one typically expects terrorists, like anyone operating outside the law, to conceal their identities behind masks.

“They were without masks, and relatively polite,” said Cherkasov. “It seemed like they were being taken away only for a chat.”

Cherkasov is not the only nonprofit worker to implicate Chechnya’s supposedly lawful government. Tatiana Lokshina, the deputy head of Human Rights Watch in Moscow, told Al Jazeera that the investigation into the killings will have no credibility unless it is controlled by the Kremlin and administered by federal investigators, not by local servicemen: “The possibility of involvement of local officials in the killing cannot be excluded at all.”

It would seem shocking that security personnel would have seen fit to dispatch two relief workers who by every account were expressly nonpolitical: The two operated a shelter and treatment center for traumatized children; they were in the business of helping Chechens, not of challenging Russia or trying to replace Kadyrov.

This is a simple public-service organization, the type a fledgling government typically likes to see. Is there anyone in Chechen law enforcement who would see fit to do harm to it?

There are. Enter the “kontraktniki.” Since the 1990s, Russia’s military forces have increasingly supplemented their enlisted troops with contract fighters who bear arms for hire. Most are unemployed former policemen and security guards.

A former Russian soldier shared with the Kavkaz Center his memories of fighting alongside these “kontraktniki,” as they were called. By his account, even conscripts hated them, and understandably so. They were usually drunk, loved to use hard drugs, and reveled in indiscriminate violence and murder far above and beyond the call of duty: kidnapping and torturing young children, shooting innocent bystanders for no reason, and even brutalizing their fellow Russian soldiers. When kontraktniki were on patrol, no one was safe.

Al Jazeera notes that since Russia’s official end of operations in Chechnya last April, Russian military units have largely pulled out.  Russian police and “special units,” however, remain. Translation: The professionals have gone home; the undisciplined and underpaid amateurs stay around.

Given this problematic situation, Alexeyava’s next observation on the double murder is food for thought: “It just shows that anyone whose position allows them a gun can kill whoever they like.”

Perhaps even kill members of an apolitical relief organization? Why not? They would have had an excuse in Dzhabrailov’s onetime ties to militants. Perhaps he knew something, they would reason. Take him in to question him. Take Sadulayeva along, too—they could torture her to loosen him up if he gets uncooperative.

Or maybe the kontraktniki would have had no specific need to seize Sadulayeva and Dzhabrailov at all. Perhaps the two were only convenient targets that they chose for no reason except to make an example of them.

As Alexayava noted further after the murders, “The climate for civic society workers in Chechnya today is absolutely intolerable. Unless the perpetrators are brought to justice, one really cannot do independent reporting of human rights work in the region on the ground.”

And that—a republic with no NGOs on the ground to call out the government or the security services on their abuses—would be a dream scenario for the likes of the kontraktniki and the Kadyrov government.

Of course, Kadyrov has every incentive to step up operations against separatists following this double murder. But if he is serious about ascertaining Sadulayeva and Dzhabrailov’s killers, then he might also want to take a hard look at his own personnel. Time will tell if he does, and if his “personal honor” is worth anything at all.

The EU holds the line on Georgia and South Ossetia

August 3, 2009

Georgian president Saakashvili is looking more vulnerable than ever. He told Reuters today that he has “no plans” to regain Abkhazia and South Ossetia, and that he is just grateful that he hasn’t been ousted yet—a fact that he calls “almost a miraculous story of survival” considering Russia’s determination to get rid of him.

“I am still sitting in this office despite solemn pledges by Putin to hang me by different parts of my body, to crush Georgia’s statehood,” he said.

His foreswearing of Abkhazia and South Ossetia is a major concession from a man who, as of last September, was “more confident than ever that (Georgia’s) territorial integrity will be restored.” It is also a sign that now, more than ever, he craves some outside support.

He has good reason for it. That support might determine whether or not Russia declares another war against him. At this moment, the European Union’s Monitoring Mission (EUMM) is patrolling the Georgia-Russia border. That mission’s charter was going to expire this September. But on July 27, the EU decided to extend EUMM through September 2010.

David Bakradze, speaker of the Georgian parliament, rejoiced at the EU’s decision.

“This is, for us, a certain guarantee that Russia will not have cause and context for thinking about any new military aggression or large-scale military actions,” Bakradze said.

Russia gives more and more reasons for worry of late. Its military’s aircraft have been known to venture into Georgian air space.  Backing them up is the contingent of 300 Russian armored vehicles that arrived in South Ossetia this weekend.

Those vehicles arrive following the four mysterious explosions in South Ossetia last week that Russia’s Defense Ministry asserted were from Georgian military firing mortar shells across the border. The claim is suspect, however, since the EUMM patrols claim no evidence that Georgians fired anything across the border. Obviously, the EUMM and Russian Defense Ministry can’t both be right. Who is telling the truth?

It is hard to know, since Russia will not allow the EUMM patrols to enter Abkhazia or South Ossetia. If no entrance, then no evidence.

And if no evidence, then any theory about the explosions is about as good as any other. Were they mortar shells at all? If so, who fired them? What could have been fired by Georgians could as easily been fired by an anti-Georgian Ossetian militant group. Or, quite possibly, from Russia itself.

Russia would have plenty of motivation to orchestrate an explosion and then pin it on Georgia. It would serve as the pretext to declare Georgia an aggressor state and topple it for the sake of Russia’s security.

Coupled with South Ossetia’s recent claim to the Truso Gorge, which Saakashvili—weakened though he is—will be sure to contest, Russia’s leadership is strategically setting the perfect stage for a second clash, not unlike the one last summer. This, though, will be one that Saakashvili’s government, and maybe even the Georgian nation itself, does not survive.

The only item of business remaining is to see that the meddlesome EU mission goes home. Fortunately, it does not appear that that will be happening any time soon.

South Ossetia braces for a fight

August 2, 2009

One of Georgia’s breakaway republics wants to break away yet a little more of Georgia. South Ossetian president Eduard Kokoity officially laid claim Friday to the Truso Gorge, a slope of the Caucasus that lies on the Georgian side of the Russian-Georgian border facing South Ossetia’s northeast.

“This unique place, where many prominent representatives of our people were born, now belongs to Georgia. In principle, this is a territory of North Ossetia,” he said.

According to Kokoity, the gorge is “an indigenous Ossetian land” that the Soviet Union transferred to the then-Georgian Soviet Republic in the 1920s, and which post-Soviet state Georgia has held onto ever since. But now, it is time for Georgia to give it back.

“Today we must raise the issue of returning these lands to Ossetia,” he said.

Georgia does not even consider South Ossetia a country. So how receptive does Kokoity think Georgia will be to a request from South Ossetia for a piece of its land?

Besides, the timing is a particularly bad one for South Ossetia to be asking Georgia for anything. For the last few months, Georgia has been protesting loudly against South Ossetia’s construction of fences along the South Ossetian-Georgian border and Russia’s construction of new military bases in South Ossetia as well as in fellow breakaway republic Abkhazia. Kokoity’s new request for the gorge is nothing less than the addition of insult to injury, and he will have to expect some hostility from Tbilisi on account of it.

In fact, maybe he hoping for some hostility. Over the course of last week, four explosions took place in South Ossetia near the Georgian border. Russian and South Ossetian officials claimed that the cause was mortar shells fired by Georgian forces. But patrols affiliated with the European Union Monitoring Mission—which is policing the border to discourage more hostilities—tell a different story; they say there is no evidence that Georgia fired any projectiles of any kind into South Ossetia. They say that there were explosions, but that there is no telling who, or what, might have caused them.

They could not have found any evidence anyway, though. Russia does not allow the EUMM teams into the territories of Abkhazia or South Ossetia. They are permitted only to skirt the borders. Make of that what you will.

No evidence notwithstanding, Russia’s Defense Ministry issued a warning Saturday that the explosions were an attack from Georgia, and that Russia will respond with full firepower to any more such attacks in the future.

“The August 2008 event developed along similar lines,” the ministry said. “If civilians or troops are threatened, the Russian Defense Ministry reserves the right to use all forces and means at its disposal.”

By its Defense Ministry’s admission, Russia’s leadership is avowedly more than willing to go to war with Georgia again, just as it did in the summer of 2008. All it needs now is for Georgia to do something that could justify it. It need not be a full-fledged attack by Georgian forces against Russia. A small event might suffice. Who is to say that a quarrel over the Truso Gorge will not serve the purpose? Stir new tensions with a further claim to land in Georgia, which will inevitably invite new rounds of virulent denunciations from Georgian politicians, which in return will invite more threatening rhetoric from their counterparts in Russia. All it will take then is for one rogue unit in Georgia, or one separatist militia in South Ossetia, or one unruly group of rioting civilians in either territory, to turn words into action and spark an incident. Then Russia has its own green light to storm into Georgia and be finished with Saakashvili’s government once and for all.

The global community should pay close attention, lest things escalate any further than they already have.

A Chechen Separatist versus Chechen Separatists

July 26, 2009

He was near the top of the list of enemies of the Russian-backed Chechen government. But that government is now reaching out to him as its last, best hope for peace.

“He” is Akhmed Zakayev, prime minister of the Chechen Republic of Ichkeria, or CRI, the Chechen government-in-exile following Russia’s reoccupation of the breakaway republic in the mid-1990s.

Zakayev met with Dukvakha Abdurahmanov, the chairman of the Russian-backed Chechen government’s parliament, in Oslo last week for a formal discussion on the ground situation in Chechnya. The meeting, which was mediated by Chairman of the Chechnya Peace Forum Ivar Amundsen, lasted for the better part of Wednesday and Thursday, and concluded with worried, but hopeful, signals on just where the still-violent status quo is headed.

“There is a need to talk,” Zakayev told Chechen Press afterwards.

The CRI had led Chechnya’s separatists in trying to overthrow Russia’s rule of their state since 1991. Russian military operations over the 15 years following drove its leadership either undergound or into exile. Zalayev is in the latter category, having lived in London since 2002.

In the CRI’s place, Russia established a reigning Chechen Republic, with an authoritarian government propped up by Moscow. But Russia has failed, so far, in its ultimate goal of quashing Chechen resistance.

“Fighting in the Chechen Republic continues, not only in the territory of the Chechen republic. They continue throughout the North Caucasus,” he said.

He added that he doubts that the massive renovation projects Russia is planning for Grozny and other Chechen cities are going to help, either.

“We can build a mosque, we can revive the house, we can build anything we want,” he said. “But as long as there is no consolidated position on the existing problems, to stop the violence is impossible.”

He and Abdurahmanov will have another, 10-day meeting in London later this year.

Ramzan Kadyrov, current leader of the Moscow-backed Chechen Republic, has been brutal in his use of force against the separatists. But he is evidently hopeful that the softer touch of Zakayev might achieve for peace what force of arms alone cannot. Thus in February 2009, he went so far as to invite Zakayev to come back and take up a permanent seat in the Chechen Republic’s government.

“It is no secret that he would like to have Zakayev as a vis-a-vis, because he believes that Zakayev now worth a lot to quite a lot of people. And if he can somehow drag Zakayev on their side, these people also would, if not his supporters, then at least, not his enemies,” said Andrei Babitsy, Russian correspondent for Radio Free Europe, on Chechen Press.

Zakayev declined Kadyrov’s offer, but said he is more than willing to work together with him on ending the violence.

“I am not in politics for the first time. Maybe even unfortunately,” he said. “Not reckoning with the reality that exists, is not just politically illiterate, it is bad for everything and for everyone.”

Zakayev represents the moderate wing in Chechen politics: pro-democracy, pro-reform, and against the use of any more violence than is needed to gain freedom for the Chechen people. These stances made him the odd man out in fall 2007, when Dokka Umarov, president of the CRI, declared the CRI officially null and void and said that his goal was no longer merely an independent Chechnya, but a vast Islamic empire, the Caucasus Emirate, which would unite Chechnya, Azerbaijan, Georgia, Abkhazia, South Ossetia, and parts of Russia under shari’ah law.

Zakayev, then Umarov’s minister of foreign affairs, immediately condemned Umarov and urged all members of the resistance to stay loyal to the CRI and to independence for Chechnya only. He lost out: All but three field commanders took Umarov’s side.

So Zakayev spoke then, and the Chechen resistance ignored him. What is to stop them from ignoring him when he speaks now? He is a moderate who is speaking to ideologues. And ideologues don’t tend to think highly of moderates. Zakayev’s stance against Umarov’s emirate is one that many in the movement have not forgotten, let alone forgiven. For a case in point, consider the story on Zakayev’s decision to work with Kadyrov as the Kavkaz Center, a Chechnya-based news agency, reported it. The story lays out the bare facts, but then goes on to remind readers of Zakayev’s “scandalous ‘appointment’” to prime minister and describes the CRI as a “telephone government” that is “living on the rights of refugees in Europe.”

Zakayev is an appealing and rational voice among many extremist ones in the Chechen separatist movement. And he holds the most workable ideas for its future. Should Chechnya ever gain its freedom, he is surely someone that it will need.

But sadly, he has only so many fans. The bulk of the resistance fighters do not want what he wants. And they are not going to lay down their arms simply because he tells them to. So ultimately, the chances that talks between him and Kadyrov will quell violence in the republic are pretty slim. But the thought is a nice one all the same.

Wide Lines, and the Crossing Thereof

July 22, 2009

Georgia’s Saakashvili took U.S. Vice President Joe Biden’s visit to his country this week as a prime opportunity to ask for new antiaircraft and antitank weapons with which to “make any hotheads (namely, the Russians) think twice about further military adventures.”

As reported by the Washington Post, he said in a publicly aired broadcast on Monday that Putin might start a new war to distract Russians from the “pretty desperate situation” Russia is facing: an economy in crisis, diminished public support, and neighboring republics exercising more independence from Moscow.

“There are hundreds of reasons to attack Georgia,” Saakashvili said. “The only thing to stop him is a clear unequivocal message from the West that there’s going to be very grave consequences.”

He noted that the precedent is already well in place, for the U.S. Defense Department has been training and equipping the Georgian military for over a decade.

“I think the decision to help us is there,” he added. “It’s a matter of speeding up the process.”

It’s true that Putin and company have little affection for Misha. And it’s true that they desire greater control over the affairs of the Caucasus region, of which Georgia is part and parcel. Just ask Lincoln Mitchell, Columbia University assistant professor of economics.

“It is clear that Russian ambitions towards Georgia did not end with the war between the two countries last year,” wrote Mitchell in the Faster Times. “Moreover, the ceasefire agreement brokered by French President Nicholas Sarkozy has been, at least on the Russian side, honored substantially in the breach.”

But a wide line exists between disliking Misha or wanting to control him on the one hand, and militarily annexing Misha’s country on the other. There is an equally wide line between Russia’s 2008 military strike in the two republics—where it already had a military presence and had been in de facto political control of for the last 15 years—and invading the indisputably independent Georgia. Is Russia really inclined to cross both lines?

One would hope not. Consider the never-ending carnage in Chechnya,—4,379 Russian fatalities in 2002 alone, according to Russia’s ITAR-Tass News Agency (who released some incomplete statistics on its own since the Russian government never released any). Given that Georgia is much larger than Chechnya, taking it over would be certain to be a much larger endeavor with a much larger body count. A serious consideration when Russia’s population is already shrinking by 700,000 people a year, according to the CIA World Factbook. Add the certain loss of needed international prestige and developmental assistance Russia would suffer, and the prospects for an invasion of Georgia seem harder and harder to justify.

Saakashvili knows that his country is just not worth the price. So his request for new weapons is one that U.S. officials should scrutinize very, very carefully.

The fact is that the very conditions that he said might motivate Putin to launch a war—Russia’s sagging economy, Putin’s diminished popularity at home, and its government’s declining power abroad—are all ones that he himself is experiencing.

Bear in mind that Russia, for its part, has warned that Georgia\’s leadership would like to attack. Bear in mind also that the European peacekeeping force that currently patrols the border between Georgia and the two breakaway republics is one that Russia, too, endorsed as a check on Georgian aggression.

Saakashvili might simply be waiting for the peacekeeping force’s charter to expire (due to happen in September) and for the United States and its allies to induce Russia to leave the two breakaway republics (however long that takes). Then he can march back in, retake them, and use his new defensive armaments to ward off a new Russian counterattack.

If he is too bold for that, then he might settle for Plan B, which is to pass the arms along to militant groups in Abkhazia and South Ossetia so that they can do the fighting and dying in his place. Russia Today reports that said militant groups are alive and well, and might have found common cause with Saakashvili long ago: A checkpoint in Ghali, Abkhazia, came under fire in late April, and terrorist attacks struck the Abkhazian capital, Sukhum, last year; Abkhazian officials accused Tbilisi of aiding both.

Or there is the low-risk, low-cost Plan C, which is just ask publicly for the weapons purely for purposes of political grandstanding. He’s just raising the specter of a looming Russian attack so as to make a public rally around a president they might otherwise despise. Quote Giuletto Chiaso in Russia Today:

“The Georgian president continues to promise his citizens to take back South Ossetia and Abkhazia under the Georgian government. But he probably understands now that this promise can be honored neither by himself nor by his successors. For that reason, he is trying to frame the situation as if Russia were to plan anything on the ground which, in fact, is not occurring, because Russia has no need at all to change the situation that Saakashvili created himself through his aggression towards South Ossetia last August.”

Of course, the United States should dissuade Russia from starting any new rounds of violence. But the United States should also make sure it does not get itself entangled in any of Saakashvili’s political games.

If the Obama administration chooses to sell arms to Saakashvili, it had better first ask some hard questions about what they are for. And it had best lend genuine moral and—better still—material support to the peacekeeping mission on the Georgian border. Obama has repeatedly stated his support for the “territorial integrity of Georgia.” Fine and good. But may he also state his support for the right of Abkhazians, South Ossetians, and Russians to live peaceably and without needless fear of armed Georgian assaults.

When All Else Fails, Try Democracy

July 21, 2009

Georgian president Saakashvili isn’t scheduled to leave office until 2013. But he’s already planning his retirement, and not without some excitement.

“The biggest response I can have [following the August war] is to organize a smooth transition of power not controlled by the Russians,” he told parliament Monday, July 20, as reported by “It would tell the neighbors—the people and not just the leaders – that Putin is no longer the main street bully in the neighborhood.”

In his speech, he spoke darkly of the encroaching Russian presence that occupies Abkhazia and South Ossetia, and of additional Russian interference in Tbilisi politics.

“We face hard times; parts of our territories are occupied by invaders, which also try to undermine our state through real and not invented conspiracies,” he said.

He likewise spoke darkly of the domestic opposition groups aligned against him, and his own inability to make them go away.

“Everyone has seen that no one is afraid of shouting from the streets, especially they are not afraid of that who came into power through revolution,” he said.

Then he laid out his one answer to these foreign and domestic threats: reform.

“Our only response to these challenges should be deepening democracy,” he said. Specifically:

  • A new Central Election Commission (CEC) with a new chair selected only with broad approval between the political parties;
  • More rights for expatriates
  • A new public TV channel on which “even the smallest political groups” will be free to express opinions and hold discussions; and
  • Large-scale dialogues among national officials and local officials, including those affiliated with the opposition parties. With enough effort by all involved, “We can turn this large-scale dialogue into new large wave of democracy.”

Why is Saakashvili talking now about the end of his presidency, given that it is four years away? Moreover, why is he painting his retirement and replacement by a new president as the strongest rebuke he can make to his Russian adversaries?

The answer to both questions is the same: He’s being realistic. When he looks ahead over the next four years, he sees that his leadership mandate is already over; he has too few supporters left to pursue any serious policy agenda. And he knows that, practically speaking, letting a new president be replaced probably is the strongest rebuke he can make to Russia; there isn’t much else he can do—by his own admission, joining NATO is almost out of the question, and winning back Abkhazia and South Ossetia will not happen any time soon.

And perhaps he is also being strategic. He knows that if he has any remaining chance of NATO membership, it lies in his making some new friends in the West. What better way to achieve this than through a “new wave” of democratic transparency? Note the Tuesday, July 21 statement of Deputy Minister of Foreign Affairs of Georgia Giga Bokeria to the Wall Street Journal: “If Russia will block Georgia’s joining to NATO, it would be a tragedy. Russia is really not able to do it, as evidenced by the position of President Obama,” said Bokeria.

Bokeria said three key things: that Georgia still aims for a place in NATO, that Russia is an opponent, and that the United States is Russia’s counterweight.

Not incidentally, if you’re seeing a recurring theme of Russia as the bogeyman, then you are right. Saakashvili’s pitches frequently vilify Russia as a looming menace. Much of this is understandable, of course, given last year’s war and Russia’s general track record of inserting itself into neighboring republics’ politics.

But a large part of it is also rhetorical. Reform is what the opposition has wanted all along, and Saakashvili is purporting to give it to them. But how to acquiesce without looking like he is acquiescing? Find an outside enemy and portray the reform agenda as a banishment of that enemy from your country’s midst.

Saakashvili is saving face, finding a foreign scapegoat, and pitching a final appeal to the West, all at the same time. He may be an inept politician, but he is a politician all the same.

Treading Lightly in Belarus

June 29, 2009

Gazprom’s harsh words for Belarus over unpaid gas bills two weeks ago turned out to be just that – harsh words.

The gas firm had given Minsk a due date of last Wednesday to pay $231 million in “debts” that Belarus had accrued by paying $150 per thousand cubic meters of natural gas January-April of this year instead of the $210 per thousand cubic meters that Gazprom had been expecting. And if no payment, then no more gas.

By Friday, debts were still unpaid and gas was still running. And Belarussian vice-premier Vladimir Semashenko told the Belarussian parliament that Belarus will pay off the $231 million amount, but not until some time between August and November.

What did Russia have to say in response? Actually, nothing. Putin told his parliament that Belarus will be business as usual; Russia will continue to sell it gas at heavily subsidized rates ($150 per thousand cubic meters ).

This is only logical, given that Gazprom stands to lose 40% of its revenue this year. In such circumstances, its leadership board have to take the conciliatory approach.

The alternative would be a repeat of last winter’s Ukraine fiasco. Whatever benefits Russia derived from shutting off the pipes to Kiev, it paid for them heavily in the form of 4.5 billion cubic meters of natural gas that never reached customers. It was a problematic strategy then, and it would be a foolhardy one now – a company that is losing 40% of its business doesn’t make pains to lose any more.

Especially when those customers are clearly making plans to seek new business elsewhere. In this case, with Western Europe. President Alexander Lukashenko is setting out to establish a Belarus-EU free-trade zone within the next three-four years, and he has made some tepid overtures to human rights – freeing a few political prisoners – to soften European disapproval of his undemocratic governance style. These actions sufficed to move Europe to lift its travel ban on him and to grant Minsk 10 million euros to improve food produce for export.

“We honestly want to forge good ties, even if this may not be to somebody’s liking,” said Lukashenko (Any guess as to whom that “somebody” might be?).

He added that Russian trade spats with Belarus over milk, natural gas, and other commodities had prompted Belarus to look more to trade with the West.

And he said something key: Cooperation with Europe is “part of a strategic plan.”

Belarus is a small market for Russia’s exports, natural gas and otherwise, but it is a market nonetheless. The two nations share multiple lucrative trade deals that Moscow would prefer not to lose – among others, a $9 billion nuclear plant that Belarus contracted Russia to finance; and Defense Systems, an intergovernmental Belarus-Russia defense firm that will be marketing its Pechora 2M surface-to-air missile system to five countries in the near future.

Belarus, positioned squarely between Russia and Europe, is in a position to draw needed business from both. And, it is in a position to use one as a counterweight to the other when it needs to. If Russia starts applying adverse economic terms, Lukashenko can start making overtures to Europe. Likewise, if Europe wrings its hands too much over the lack of democracy in Belarus, Lukashenko can call on Russia for backup.

Russia has little to fear of Belarus abandoning Russia altogether. The Belarussian economy, with its reliance on Russia for more than half of its import commodities and its natural gas, would not survive without Russian business. Belarus is far from independent. But it is close enough to independence that it can, and will, keep Russian hubris in check.

Gazprom Squirms

June 29, 2009

Gazprom is supposed to be a natural gas monopoly. But a 40% plunge in sales this year suggests that it is starting to feel the pinch from competition.

While Europe’s demand for natural gas will have dropped a mere 5% this year, according to an RIA Novosti analysis by Oleg Mityayev, Gazprom’s export earnings are on track to drop a whopping 38.5%—$40 billion, down from last year’s $65 billion.

“It transpires that, along with the shortfall in earnings, the key Russian gas exporter lost part of its control of the European gas market to competitors,” he wrote.

Those competitors include Norway, Algeria and the Gulf States, who have all been shipping Europeans comparatively much cheaper supplies of liquefied natural gas.

Norway alone will export 100 billion cubic meters this year, according to Jarle Hetland in European Voice, up from 85.7 billion cubic meters in 2007.

An official with the Norwegian Petroleum Directorate said that it could increase exports by 10 billion-15 billion cubic meters more in the year following.

And that was before last week, when Shell discovered an enormous new gas field in the waters off the Norwegian coastal town of Gro. This field contains no less than 100 billion cubic meters—enough that, if pumped, would elevate Norway from being the world’s fifth-largest producer of natural gas to being its third-largest (Russia would still be number one).

Norway benefits from a “spot” pricing model, based on prices that can raise or lower at a moment’s notice. Russia’s prices are bound by long-term contracts, which dictate a price based on where the world’s oil price stood at the time of writing—in effect, tying the price of gas now to the price of oil six or eight months ago.

As most consumers are well aware, oil prices around the world fell significantly during the last eight months. So gas prices based on eight-month-old oil prices will inevitably be somewhat over priced.

“Our consumers, being rational in their approach, have opted for the less expensive choice,” said Medvedev.

In addition to buying cheaper gas from Norway, European consumers have been using up more of the previously accumulated stores of gas they already bought from Gazprom over the years. Use of already-accumulated fuel increased by 65% in the first quarter of 2009. In the meantime, Gazprom’s world-leading supplies have to wait for willing buyers.

Gazprom has more gas than it can sell,” wrote columnist Paul Taylor in the Moscow Times on Monday.

He quotes a Brussels official, who told him (anonymously, of course) “We are enjoying watching the Russians squirm.”

It is doubtful they will be squirming for long, though. The United States’ Energy Information Administration forecasts European demand for natural gas going up another 13.8% (or 3.8 trillion cubic feet) between 2010 and 2020. Norway will not be in any position to fill this need.

Nor, of course, are stores of already-bought gas any long-term strategy. Sooner or later, stores run out. Then they will need to be replenished with yet more gas from Gazprom. The gas giant will be in an ideal position to provide, given what else is expected to take place between 2010 and 2020: the completion of the Nord Stream and South Stream pipelines.

Talking Tough on Natural Gas

June 21, 2009

Russia turned off the natural gas lines to Ukraine last winter in a dispute over gas prices. It may now shut off the spigots, in like fashion, on Belarus.

Last Wednesday, Russia gave Belarus one week to pay $231 million for underpayment on natural gas delivered January-April of this year. Belarus had been paying $100 per cubic meters of gas during those four months, though the contract price was for $250 per cubic meter.

This episode is by no means the first time that Belarus and Russia have crossed words over natural gas. Gazprom threatened Belarus with a gas shutoff back in December 2006,  though some last-minute negotiating stopped the firm from carrying this out.

Whether negotiations would be as successful this time around has far-ranging repercussions, not only for communities in Belarus, but in many communities outside it as well: Most of the 10 billion cubic meters of natural gas that Russia ships into Belarus flows onward to consumers throughout Europe. Not unlike Ukraine’s gas, which thousands of Western Europeans sorely missed during last January’s Russia-Ukraine gas spat.

Belarus will probably propose to meet Russia halfway, according to Belarussian daily Belaruskaya Delovaya Gazeta, which cites Belarussian officials who expect that Belarus will offer to pay $150 per cubic meter.

They are taking a gamble, though, because economically speaking, their country is not in much of any position to bargain. According to the CIA World Factbook, Russia is the source of 59.5% of Belarus’ imports and the destination for 36.5% of its exports. By comparison, only 4.4% of Russia’s imports come from Belarus, and only 5% of its exports go to Belarus. Belarus needs Russia a great deal more than Russia needs Belarus.

Moreover, Russia graciously ended a months-long standoff with Belarus on Belarussian milk imports last week, as reported by RIA Novosti (Russian authorities had banned all Belarussian milk from Russia on June 6 because they deemed Belarus to be noncompliant with new Russian regulations on the export and import of dairy products. Belarus fired back by first dropping out of a new interstate security accord with Russia two weeks ago, and then imposing new customs controls on its border with Russia last Wednesday. Within hours of the border controls taking effect, Russia dropped the ban on milk). As such, Russian officials may feel that they are owed.

On the other hand, Russia is in the middle of a bid to jointly enter the World Trade Organization with Belarus and Kazakhstan. It might be inclined to hold off on any gas wars for the time being, lest it weaken its case for WTO membership by angering European WTO members who won’t like having their gas shut off yet again, not to mention appearing like an overall economic liability prone to volatile trade flows.

In all probability, this one-week ultimatum might really be a means to an entirely different end: upping the ante on construction of the Yamal-2 pipeline, which is expected to bypass all transit countries and thus render gas cutoffs of this kind unnecessary. If Dutch and German investors bankrolling Yamal-2 so much as hear that the status quo of existing pipe lines might mean future shutoffs of needed gas, they’ll probably get much more generous, and much more excited to see Yamal-2 completed very soon.