Dear Friends,
“The Texas Solution and Jamtland,” sent from Baku on August 27 or 28, was to have been my last file as part of the ‘Creeping Caucasus Catastrophe’ series that I initiated some weeks ago, but I take it all back because I have at least one more file to write before my departure back to the USA very early Monday morning (and via Moscow, or at least a seven hour forced layover…what fun).
This file will be a sort of wrap-up of impressions and recollections drawn from the entire two-week boondoggle and then end with certain observations of what I hope are the not-so-obvious implications of the Russian action in Georgia, and then an offering of predictions. I might cheat and just cut & paste an article written by the other party in my two-person book discussion club, (former) US ambassador to Azerbaijan, Stanley Escudero, for the US Chamber of Commerce in-house magazine in Baku. Stanley set up a lunch for the board of directors on August 28 after my arrival in Baku from Tbilisi the day before, with me as key-note pontificator mainly on the basis that our rather pessimistic/realistic views seem to be so much in line and that I would say things he wanted re-iterated. As for his analytical article, it probably makes a lot of folks uncomfortable. I do not see much I could add to it. I shall share the last graph right now, and then move back into my field of play.
“As for those of us who conduct business in Azerbaijan, we need to recognize that in this process we, even the largest among us, are not actors but are acted upon. This is a time for careful observation, for assessment and adaptation, for hedging our bets while advancing our business plans and continuing our businesses in ways which help both our bottom lines and the future of Azerbaijan.”
Azerbaijan?
But wasn’t this entire ‘creeping catastrophe’ stuff all about Russia and Georgia?
Read on, dear soul, read on…
*
For the past 24 hours, ensconced once again in Hijran’s garden apartment with a tiny side-view of the Bosphorus and Golden Horn, I have had the luxury of catching up on diverse emails that I had no time to file or process during my two-week long, seat-of-the-pants romp through Georgia. There is probably another stack of some 500 messages built up in my erstwhile primary email account
goltz@wtp.net which fried about two days into the journey, and to which I still have no access. The server has still not bothered to inform me why they fried/froze the account, just when I needed it most. Ah, well. One of the things that this journey has taught me is the need for backing up everything associated with modern communications, and indeed life. Back up email systems, back up telephones, back up emergency evacuation plans, back up money, back up friends and back up clean shirts. And back up oil and gas delivery systems, if you are a country like Azerbaijan.
In any case, in the mass of built-up back-log on my computer, I ran into a message from an editor from the Wall Street Journal concerning a story idea I had back in mid-July. Essentially, I was proposing a quick trip from Istanbul to the eastern Turkish city of Kars to attend the grand inaugural ceremony of the Turkish leg of the Kars-Tbilisi-Baku ‘Steel Silk Road’ railway on the afternoon of July 14th.
While not as sexy as the Baku-Tbilisi-Ceyhan (BTC) main export pipeline that I rode my motorcycles down in the years 2000, 2001 and 2002 (and which finally opened in July of 2006), the KTB is a project I have long kept my eye on, from its initial ‘insane idea’ phase circa 2001 or 2002, through the various studies, the political back-lash (Armenian lobbyists in DCs demanding that Congress pass resolutions depriving credit to the project unless it included Armenia; the whole idea of the KTB was to further tighten the screws on that country by avoiding it, etc), the first ceremonial ground-breaking in Georgia (Azerbaijan floated an interest free loan to the Georgians to avoid the US Congressional demands altogether), and then finally, the meeting of the three presidents of Turkey, Georgia and Azerbaijan at Kars to symbolically slam in the spikes of the last 29 kilometers of track of the multi-millions USD project to be built from Kars to the Georgian frontier, which would link ‘London to the Great Wall of China’ (and other hyperbolic notions along that line) and thus massively increase trade and travel along a modern Silk Road, and bring prosperity to all (or at least to all participating in the project) when it finally came on line circa 2012 or so.
Now, why it would take six more years to complete 29 kilometers of train track was always a mystery to me; so was the routing namely, across the often restive part of southern Georgia usually referred to as Javakhkheti, which is populated mainly by (maybe separatist) Armenians who represented, one would think, some sort of security concern. The BTC pipeline planners very specifically avoided running through their neighborhood, and presumably with good reason. Be that as it may. The main point was that by belief and grit and the happy fact that Azerbaijan had the money to throw around without reference to the lending whims of the US Congress (and thus OPIC, the IMF, World Bank, etc), the KTB was getting done, and it seemed a natural story for me to go out and write about, and then proceed to have some pre-Fall Semester 2008 adventures in the Turkish east, such as a jaunt into Naxjivan, or possibly a quick plane ride to Baku aboard the newly initiated Baku-Kars flight on Azerbaijani Airlines.
Imagine that! An AzAl flight to Kars! The south Caucasus was really starting to take off, and with good ol’ Azerbaijan as the economic motor! My, how times have changed!
As it happened, the people at They Hate You airlines (THY, the national carrier) left me in the lurch, and a furious me flew south instead to spend a lovely five day period as the guest of Hugh and Jessica Pope (and god-daughter Scarlette) at their place in the hills outside Olympos, where we sat back and considered the fate of the Justice and Development (‘Islamist’) Party of Prime Minister Erdogan, talked life and literature and other issues. I could still have written an Istanbul-based OpEd on the KTB I guess, but it would not have felt right, and there were a dozen other things to do. But I never got back to the editor to tell him I would not write up the event (he had not commissioned it; he had merely expressed interest in taking a look once I got back from my non-trip).
Fast forward to a meeting I had in Baku last week with a number of highly intelligent individuals engaged in Azerbaijani foreign policy. While we are all old friends and could be content to speak about the weather, the obvious subject of interest was my impressions, evaluations and analysis of the situation in Georgia, and its impact on Azerbaijan. I tried to be honest. I said things like “If I were the president of this country, I would expand the annual ‘Azerbaijan Cultural Week’ in Moscow to the annual “Azerbaijan Cultural Month.” (chuckles) and “I would also bestow not just an honorary doctorate on Vladimir Putin from Slavyan University, but rename the university after him.” (more chuckles). And then I guess I said something wrong, because the main host became agitated, glared at me and then sort of declared the lunch to be over because he had an important meeting to attend. It may have been completely coincidental, but all this happened after I had said something like “And the Kars-Tbilisi-Baku railroad…has become a joke.”
Am I over-interpreting? It is possible.
But unlike the BTC, which is ‘safely’ under the ground, or most of it) the KTB is by definition on top of the ground and unfinished. And unlike the BTC, which was a consortium project led by BP, and thus part of a larger, international oil & gas network, the KTB is very specifically an Azerbaijani-initiated project put together by regional governments (Azerbaijan, Georgia and Turkey) that are now under threat by ‘resurgent Russia’ in a way that the BTC never was or will be. As such, it is a perfect pressure point, and I will go so far to say that not one piece or rolling stock much less millions of happy passengers will ever roll down that Silk Steel Road Line without explicit permission from Moscow. If that is true, then the KTB is also a perfect symbol of what the south Caucasus states (plus Turkey) will have to be dealing with in the future.
*
A few brief notes on my four days and nights in Az, and then on to the main subject of this epistle, Turkey.
I missed the whistle time at Tbilisi station because I had to stop off and have a deep-dark political conversation with my refugee sister pals Nunu and Nana Chachua before leaving town (readers of the Georgia book will recognize them and not be shocked at their attitude toward the current conflict; in essence, it is: ‘let the Russians come and bomb Tbilisi a bit so that the people here understand what we had to get used to in 1993 in Sukhumi, and then let the Russians occupy the country, demilitarize it and turn us into a neutralized satellite state. At least we will know where to sell our wine’…) and thus was obliged to catch the Iron Horse at the end of its 3 hour wait at the Georgian/Azerbaijani frontier. Nothing new about this; I have shown up without a ticket a half dozen times, handed the conductor a couple of bucks and presto! Gone on my way. But this time it was different. For starters, the conductor and guys working the passenger wagons were all Azerbaijani gals, or women, and they would have none of this ‘let me slip you a bill and give me a berth’ business. It took real convincing (speaking Azerbaijani of course helped) as well as the real promise that I would allow myself to get kicked off the train if there were no ticket to be had at the first station on the Azerbaijani side of the border. While I did not want to camp at the station, at the same time it was truly refreshing to note that yet another standard, little corruption in the Azerbaijani state system had become history.
The huge placard in the station, a famous saying by Heydar Aliyev, said it all: “I think that the railway system in Azerbaijan is really developing!” H.Aliyev…
The journey itself, after having acquired the ticket, was not interesting. It was night, hot, but not crowded or nasty aside from the communal toilet. Most of the passengers seemed to be Azerbaijani oil men working the diverse export points on the Georgian Black Sea coast that had been shut down by the war, and Georgians with something to do in Azerbaijan. I only mention this because there is indeed some weird Ali & Nino camaraderie between these two countries, living a sort of déjà vu of the 1918-21 period.
In the morning, my friend Yusuf Agayev picked me up at the station and we went through our standard realpolitik evaluation of the situation. As a military man and historian (readers will remember him from the Az Diary book as the Military Prosecutor in Karabakh who was wounded out of action three times, and nearly killed during the fall of Aghdam; he now works for Transparency International) Yusuf could only chortle cynically about any and all reports by non-military specialist reporters that Saakashvili had somehow initiated the crisis, and that the Russians had ‘merely’ made a disproportionate response. Then we scooted back to his place for me to wash the filth out of my clothes, have a quick breakfast, watch and compare Russian TV with the BBC reports on the Russian Duma Upper House decision to ask for recognition of South Ossetia and Abkhazia as independent states, after which I slept for a spell, and then went into town.
The next three days were a bit of a blur. Lunches, dinners, meetings, WiFi site discovery, bad crash pad selection, a new B & B managed by a burnt out veteran of the Karabakh war, meetings high and meetings low. Hot. Windy. Chance encounters with old friends. A sense that the place has been ruined by insane construction. A sense that a new generation has taken root. A sense that Azerbaijan has become an international cul de sac, and knows it. I will let Ambassador Escudero’s analysis serve as my own, and then return to Turkey after dinner.
Hijran is getting snarly; the reality is that I keep Soviet-style hours, waking at the crack of noon and grinding things out until 6 AM, which is usually when she wakes.
Thus, herewith the Stanley notes to end this file half-way through.
I will pick up with the Turkey content as a Part Two.
Bests
Thomas, Istanbul Aug 30 (Turkish Victory Day), 2008
Herewith the Stanley
THE RUSSIA/GEORGIA CONFLICT AND ENERGY SECURITY
After the energy security article in this magazine was already finished and “Impact” had gone to press the Russo-Georgian conflict erupted, proving my point about the futility of pipeline security in face of international conflict. Unfortunately, it proved the point rather sooner than I had expected. As I had already inflicted my opinions on you it seemed only right to compound my sins via this insert which tells where I think we are now and what it all means. When writing about current events for a magazine it is very difficult to avoid being overtaken by the pace of those events. But if everyone, including the Baku business community, is lucky, the pace of this drama will slow and this insert will still be relevant when you read it.
So, does the war between Russia and Georgia, ostensibly over South Ossetia, endanger the security of the BTC and Azerbaijan’s other pipelines? Of course. The extent of that danger depends upon the extent of Russian ambitions.
Within Russia there is a powerful faction which has never accepted the loss of the Near Abroad when the Soviet Union dissolved. An even larger segment of decision-makers resents the election of pro-American Mikheil Saakashvili to lead a country which they regard, with some justification, as well within Moscow’s sphere of influence. I would guess that virtually all of Russia’s leadership opposes the policy of developing an energy transportation corridor from the Caspian Basin through Azerbaijan, Georgia and Turkey to the West which moves oil and gas from former Soviet territories to western markets outside of Russian control. It seems to be a major goal of Russian foreign policy to gain control of the largest possible share of gas flowing to Europe, thereby obtaining extraordinary economic and political influence in European capitals.
When the West helped Kosovo to become independent Russia made its anger very plain. Russian diplomats even threatened a riposte, specifically mentioning South Ossetia as a possible focus for their reaction. They laid the groundwork for this by granting most citizens in South Ossetia Russian passports, thus making it possible in advance to claim that any future Russian military action in that province was taken in defense of Russian citizens. With all of this in mind the Georgians were exceedingly foolish to respond to violence from South Ossetia by sending in their army, reportedly against American advice. Not only was a strong Russian reaction predictable but the speed and scale of Russian military action suggest that Moscow had already prepared its strike and this in turn suggests that Saakashvili may have fallen into a clever Russian trap. Whatever the truth may be, Tbilisi now finds itself in a game in which Russia holds all the cards.
The West promptly made it clear that there will be no military rescue from that direction. In fact this was never a possibility. Europe, which had the capacity to intervene in the Balkans, did not and would not have considered intervening in Georgia even had it had the capacity. The United States is already committed in Iraq and Afghanistan (as is Europe), its President is unpopular, politically weak and at the point in his second term at which any American president finds it hardest to take dramatic foreign action. The American electoral process works against such steps at this point in the campaign and the new Administration, seeing how badly the Republicans have suffered politically over the Iraq affair, is likely to regard any new foreign adventure with great caution. The Russian veto in the Security Council will preclude the United Nations from taking any meaningful action in support of Georgia, even if it wished to. And, given the relative power and importance of Russia versus that of Georgia not to mention Russia’s immediate military and geographic advantages, no such intervention should be contemplated. If Russia stops at separation of South Ossetia and Abkazia, the most that can be expected are public statements such as those already made by President Bush and by Europeans leaders, given substance by the valiant efforts of the French, which succeeded in bringing about a ceasefire. But, at least in the short term, the success of the ceasefire and the terms and extent of any subsequent solution are almost entirely dependent on what the Russians are willing to permit to happen.
In my view this affair is an exercise in nineteenth-century balance of power politics in which it continues to be the case that the strong do what they can while the weak suffer what they must. And brilliantly played by Moscow so far.
In the short term the Russians are going to win this one. The question is, “What exactly do they want to win?” If what they seek is to institutionalize the separation of South Ossetia and Abkazia from Georgia proper, I believe that the West will reluctantly acquiesce, in fact if not in name. There is no choice. The present Georgian government insists that it will never accept separation but, in the end, what can it do about it? Public acceptance would doubtless prove politically fatal to Saakashvili but the ceasefire itself was built on the time-honored diplomatic tactic of constructive uncertainty and it is the essence of good diplomacy to devise those polite fictions which enable even the reluctant to disguise the inevitable.
But Russian ambitions may well extend to regime change in Georgia. Russian diplomats have said as much to US officials and in public, where they have declared themselves unwilling to negotiate the details of the resolution of the conflict with a Georgian government headed by Saakashvili. Not surprisingly, President Saakashvili insists that regime change is Moscow’s primary goal and the leaders of both countries have exchanged public insults. As this is written TV news reports Russian withdrawal from Georgia proper except for an “administrative” strip along the southern borders of South Ossetia and Abkazia, the retention of checkpoints in Gori and a military presence in Poti, which remains closed
There are any number of hypothetical scenarios which could produce regime change in Georgia but, fortunately, the Kremlin seems to have decided not to follow the most direct one – simply conquering the country and replacing the government by main force. One likely scenario for coming days has the Russians insisting on maintaining substantial armed force within Georgia until the arrival and emplacement of the international peacekeepers envisaged by the ceasefire agreement on grounds that internal Georgian security cannot otherwise be assured. Afterwards it seems probable that Moscow will permanently re-enforce the numbers and military capacities of its peacekeepers within South Ossetia and Abkazia and conduct occasional armed probes into Georgian territory on one security ground or another.
These and other measures could be intended to increase internal Georgian dissatisfaction with Saakashvili’s regime, creating conditions in which a Russian-backed but publicly deniable movement to replace him could succeed. Stranger things have happened. But any scenario which involves regime change in Georgia, and thus dramatically increased Russian influence over the east-west flow of oil and gas, significantly raises the stakes for the West, Russia, Georgia and the South Caucasus. And that leads one to ask what, questions of payback for Kosovo and national prestige aside, would Russia hope to gain by having a government in Tbilisi more responsive to its wishes?
This brings us back to Pipeline security and the export of Caspian Basin oil and gas, especially the latter. Note that the BTC pipeline ( now functioning again) was recently blown in Turkey by “terrorists” who may or may not have been Kurdish. I find the timing suspicious. Then there were news reports, still unconfirmed as of this writing, that Russian aircraft attempted to bomb the pipeline within Georgia. The Russians and BP deny this. At the same time the Russians have shut down the northern pipeline to Novorossiysk for “maintenance,” another suspicious coincidence. I understand that rail transport, and thus the export of some Azerbaijani oil via rail to Batumi, has ceased to function because the Russians blew up a railroad bridge east of the Georgian town of Kapisi. And the press reports that, as an understandable precautionary measure, BP has halted export of oil via the smaller pipeline to Supsa, though the pumping of gas into the Baku-Tbililsi-Erzerum pipeline, also halted during the fighting, may soon resume. Clearly pressure on Azerbaijan has already begun.
Georgia, in the colorful phrase of Z. Brezhinski, is “the cork in the bottle” of the Caspian Basin. A Georgian government more subservient to Moscow could increase the costs of oil transiting the pipeline, demand renegotiation of the terms of pipeline ownership or operation, pose obstacles to the increase of the capacity of the BTC line, construction of a parallel line or construction and operation of the Baku-Tbilisi-Erzerum gas pipeline or, in extremis, shut the things down altogether. A subservient Georgian government could be the key to a Russian victory over the US and Europe in the current round of the Great Game for control of export of the energy resources of the Caspian Basin and Central Asia. It could make construction of an undersea gas pipeline from the east coast of the Caspian to Azerbaijan irrelevant. It could prevent construction of the planned Nabucco undersea gas pipeline from Turkey to the Balkans by denying the gas to fill that pipeline. Along with the gas already provided to Western Europe from Russia and Gazprom’s efforts to purchase control of the gas produced by Algeria and Libya and currently sold to Europe, its could assure Moscow’s control of the vast majority of Europe’s gas supplies, gaining Russia immense political and economic influence within Europe. At the very least it would give Russia a much stronger hand to play as the Great Game progresses.
The risks to the West stemming from regime change in Georgia would virtually ensure western counter measures to damage Russian interests. The French, Germans, Poles, Ukrainians and the Baltic nations have demonstrated their support for the Tbilisi government. But the more severe the counter measures under consideration, the less likely it is that the Europeans (well aware of their energy dependence) will be unified in supporting their imposition or their implementation. NATO, for example, has so far shown itself incapable of anything more than a relatively mild statement of disapproval on the invasion. The Europeans are planning to meet further on this crisis and the Americans are talking of (unspecified) dire consequences for bilateral relations. However, while the US will deliver humanitarian aid and rebuild some of the damage in Georgia and perhaps even help to rebuild the Georgian military, the regional power imbalance suggests that any western response would be non-military and directed primarily at Russian interests elsewhere, outside of the Caucasus. The invasion accelerated signature of the long-planned US-Poland agreement on stationing antimissile batteries on Polish soil over strong Russian opposition. Russia has been denied participation in regularly-scheduled NATO military exercises. Future Western steps could include bringing Ukraine into NATO (with consequences for Russian use of Ukrainian ports in the Black Sea), removing Russia from the G-8, rejecting or delaying its application for entry into the World Trade Organization or denying Russia its hosting of a future Olympics Games in Sochi.
The West will try to keep its response proportional to Russian actions so, if Russia can be satisfied with the gains in regional prestige it has already achieved along with the separation of South Ossetia and Abkazia, as opposed to regime change or something more, the chill in the Russo-Western relationship will be less deep and of shorter duration. At some point, before the process of action and counter action sets too many teeth agrind, Russia, the US and, one hopes, a unified Europe need to sit down for a no-holds-barred discussion of their respective interests and how they can be mutually accommodated.
More immediately the whole crisis and the possibilities that flow from it suggest that Azerbaijan and those of us who live and work here are entering a very delicate period in which Azerbaijani oil and gas passing through Georgia will be as secure as Russia wants it to be. No matter how it turns out, Russia has made a compelling statement regarding its perception of the scope of its interests, its willingness to act on that perception and the limits of Western opposition to such action. None of this will be lost on regional governments.
There is also a speculative possibility that Armenia, which for over a century has served as something of a Russian catspaw in the Caucasus, will be emboldened by Russian actions in Georgia. With or without Moscow’s encouragement this could lead Armenia, which is growing progressively weaker in comparison to Baku, to seize this moment to threaten the oil flow, demand cession of majority Armenian portions of Georgia or otherwise further destabilize the region.
This period will call for extremely deft management of Azerbaijan’s role within what I call the Quadrilateral Balance. Think of Azerbaijan as a point within a square defined at its four corners by Russia, Iran, Turkey and the West (the US and Europe). The Azeri point can never move too close or too far away from any of the four corners but must periodically adjust its position within the square in response to developments at the four corners. Easy to describe but very hard to do. Fortunately, President Ilham Aliyev is very, very good at this. We can be sure that he is paying the closest attention to events and should all have confidence in his sure-handed ability to guide Azerbaijan through this suddenly troubled period. The Azeri government has already issued a statement supporting Georgia’s territorial integrity. This was a courageous step in view of the obvious risks but Baku could do no less, as territorial integrity is the very heart of its position demanding the freedom of Nagorno Karabakh and the other seven provinces from Armenian aggression and occupation.
As for those of us who conduct business in Azerbaijan, we need to recognize that in this process we, even the largest among us, are not actors but are acted upon. This is a time for careful observation, for assessment and adaptation, for hedging our bets while advancing our business plans and continuing our businesses in ways which help both our bottom lines and the future of Azerbaijan.
Finally, I cannot state too unequivocally that the views expressed here are entirely my own. They do not reflect the opinions of the American Chamber of Commerce in Azerbaijan, the Government of the United States or those of any other government, institution or entity.
END