Energy

Gazprom’s Karelian problem

An interesting twist in the Nordstream saga. Finnish state radio reports that

A group of Finnish businessmen are using Russian plans for an undersea natural gas pipeline from Russia to Germany as a bargaining chip in international politics. The businessmen say that they have been offered large sums of money to drop a mining claim for an area on the bottom of the Gulf of Finland, which lies on the planned route of the pipeline. The claim has been pending for a year… The businessmen have rejected the money, but have offered Russian officials a proposal under which they would drop the claim if Russia agrees to start talks with Finland on the return of areas annexed by the Soviet Union after the last war.

Russia to deploy 2 full-sized armies in Belarus

Following Russia’s Kavkaz-09 (June 29-July 10) military exercises, the large-scale Ladoga-09 exercises which began in north-west Russia on August 18 will be supplemented on September 8 by Zapad-09, in the course of which Russia will deploy two full-sized armies in Belarus. Milaz.info reports that Russia’s ground forces are now deployed in six military districts: Moscow, Leningrad, North Caucasus, Urals, Siberian, and Far Eastern.

Commenting in Novaya Gazeta’s military pages, Yuri Deryabin, head of Moscow’s Centre for Northern Europe, expresses the opinion that Russia’s government should make its position on North European security unequivocally plain. In addition to applying the economic muscle of the North Stream project, the Kremlin must demonstrate to Europe and the West that it has the military means to enforce its will in Northern Europe, especially in the Baltic, and the ongoing military exercises are an effective way of doing this.

Nabucco signed

Today’s signing of the Nabucco gas transit agreement by Austria, Bulgaria, Hungary, Romania and Turkey is a first step along the way to the construction of a pipeline that will ship gas from the Caspian to central Europe via Turkey, bypassing Russia. But there are some imponderables: if suppliers of gas for the pipeline include not only Central Asian states include Iran, Iraq and Russia, there are likely to be political problems – and the Central Asian states which originally agreed to be suppliers are coming under pressure from Moscow, which is prepared to go to almost any lengths to prevent the pipeline being completed. Another factor is Georgia – President Saakashvili’s presence at the signing ceremony in Ankara underlines the EU’ leadership’s view of Georgia as a natural transit country.

Medvedev and "Helsinki-plus"

During talks with Finland’s President Halonen in Helsinki on April 20, and also in a speech he gave at Helsinki University the same day, Russian President Dmitry Medvedev outlined shadowy proposals for a “new European security structure” which would also involve energy-related considerations. The proposals would be discussed at a prospective summit forum in Helsinki, to be called “Helsinki-plus”.

In her blog, the Finnish centre-right politician, OSCE advisor and human rights campaigner Nina Suomalainen comments on Medvedev’s proposals, and wonders what they may actually involve  [my tr.]:

Did Russia’s so-called Helsinki-plus initiative take a step forward in Helsinki, or not? Finland’s chairmanship of the OSCE and the OSCE meeting that was held in Helsinki in December last year stuck closely to the line that the current structures are a good basis for agreement on European security issues.

This week, President Medvedev raised the issue again. For Russia is not very pleased with the OSCE, which it feels pays too much attention to questions of human rights. The holding of free elections has also been another of the OSCE’s preoccupations, and Russia cannot ignore the fact the elections brought about a change of government in Georgia and Ukraine.

However, it is not really clear how President Halonen viewed the matter, except to say that Finland would provide help with regard to the meeting place, and “everything else”. Foreign Minister Stubb, however, seemed skeptical, and reiterated the OSCE’s approach: No new structures are required.

Russia’s Helsinki-plus idea doesn’t really have much precision or clarity, and in spite of efforts that have been made, its content is still not understood. One guesses that it is mainly a proposal for a review of the security question mainly from Russia’s own standpoint, leaving aside all the nonsense about democracy. So it is probable that Helsinki-plus will be on our tables for a long time, and that at some stage it will emerge in the form of a real initiative, as a concession to Russia. Medvedev’s comments and the “maybes” of the Finns fit together like a nose on a head.

Another issue that is creeping up is the Baltic Sea gas pipeline. On the positive side, the opportunity for Finns to make land deals in Russia were high on the meeting’s agenda. Though it sounded – rightly or wrongly – a little as though this was the first that Russia had heard of it. Now it will have to really think about how to react to it.

Hat tip: FinRosForum

Soros on the geopolitics of cheap oil

The financial broadsheet Vedomosti has published an article (in Russian) by the international financier and philanthropist George Soros in which he gives his assessment of the effects of the economic crisis on the global political landscape. In his analysis he suggests that the recent dramatic fall in the price of oil may not be entirely a bad thing, as it is likely to promote some realism in Teheran, and make Mahmoud Ahmadinejad’s return to power in Iran’s June 12 elections that much less probable. On the other hand, there are dangers elsewhere. In Russia, Soros continues, the loss of oil revenues is likely to propel the leadership towards more adventurism abroad and greater repression at home. Nationalism has replaced Communism as the official ideology, and the people who are currently in power in Kremlin have few scruples about using the enormous might of the state to further their own individual ends.

Readings of the gas dispute

A number of observers have now pointed out that Russia’s main aim in its gas conflict with Ukraine appears to be the division of Ukraine, and ultimately the destruction of its national sovereignty. Jamestown’s Roman Kupchinsky, for example, says that 

If Gazprom is successful in stopping the flow of gas to southeastern Ukraine by insisting that gas to Europe go via Sudzha, the Kremlin’s strategy of provoking mass disturbances in these regions in order to precipitate a “popular” anti-Tymoshenko-Yushchenko uprising would intensify calls in these critical regions to join the Russian Federation. With the Ukrainian Party of Regions seemingly more loyal to Moscow than to Kyiv, Putin and Medvedev apparently feel confident that such a strategy would transform Ukraine into a second, pro-Russian, Belarus-like puppet state in the CIS and give Russia control over the Ukrainian gas pipeline to Europe. The consequences of this for the EU would be disastrous. For Gazprom, however, it would be a major coup, allowing it to abandon the costly South Stream pipeline project and, at long last, to destroy the Nabucco pipeline scheme.

Other commentators agree with this assessment, but some offer a less pessimistic analysis of the current situation. On Thursday, Marcin Wojciechowski wrote in Gazeta Wyborcza that

The gas conflict is uniting the divided Ukrainian elite. The Russians reckoned that it would be enough to cut off the gas to pro-Russian eastern Ukraine, and Moscow’s supporters would descend upon Kiev in fury. There is none of that. Even Ukraine’s pro-Russian politicians balk at the thought of a disintegration of the country inspired by Moscow. Ukraine has prepared itself for the gas cut-off much better than one might have expected, and will not submit to brutal pressure.

[my tr.]

In a recent discussion of Russia’s use of gas as a political weapon, Norway’s Aftenposten quotes Jakub M. Godzimirski at the Norwegian Institute of International Affairs as saying that Russia may be prepared to take financial losses in order to gain political capital.

Update (Jan. 18): a deal has now reportedly been struck.