[politics filter]
OK, time for some general ruminations on the state of affairs w.r.t. Russia…
First news item for the day: The World Bank has decided to provide $250M in financing for a pipeline from the Caspian Sea to Turkey. The pipeline would go from the oilfields near Baku to Ceyhan in Turkey, whence the oil could be loaded onto supertankers from the large port there.
Some background on this: The Caspian holds one of the world’s largest untapped oil reserves. It’s a big prize, by any standard. There used to be a pipeline out of there, but it ran through Chechnya, so it’s been rubble for a while. About 8 years ago, when the first bout of fighting there was calming down, people started looking at where to run the line. There were three major possibilities: through Georgia, through Armenia, or through Iran. Georgia was considered a bad idea because Shevardnadze, the then (and still) ruler, was considered an unstable nutjob and it wasn’t clear if he’d just try to take it over if it went through his country. The Armenian route would have to go straight through Nagorno-Karabakh, site of the interminable fight with Azerbaijian, which is constantly on the verge of turning into a major war. So for a long time, the European partners in this routine wanted to go through the northern tip of Iran, on the theory that at least Khatami could be trusted. Needless to say, the American investors in this were less big on the idea, since there’s a total embargo on Iran. (OK, to be honest, the American investors didn’t seem to have many objections at all, but the government was quite set against it, and it wasn’t worth it for them to buck that. Also, as an interesting side note – if I remember right, the biggest American investor in all this was Chevron. Know any administration officials that used to work for Chevron? I know two.) But this all got put on hold by various bits of politics, mostly the logjam between the American and European groups.
So – the World Bank just agreed to join the financing, and the final route is going through Georgia. (This makes sense – Shevardnadze has mellowed out over the years, and Iran seems to be going the opposite way, especially with its increasing ramping of its nuke program. BTW, expect trouble on that front very soon) Looks like the preferred American route won out, and Russia is going into full-scale development mode there.
Now, the other two Russian events of the past few days: The arrest of Khorokovsky, and the appointment of Kvashinin to run all of Russian intelligence.
First of all, Khodorkovsky. It’s pretty clearly a political arrest – the only question people seem to have been worried about was whether Putin was about to go after all the oligarchs, the whole business system, or just Kh. personally. It looks like it was the latter; Putin came out the next day to reassure everyone that business would continue as usual, and urge the police not to be too aggressive in going after businessmen. (Although Putin’s order to arrest Khodorkovsky’s shares in Yukos must be described as rather amusing. I’m glad those shares aren’t still out walking the streets, mugging innocent old ladies…)
One obvious reason Kh. was a target is because he’s rich and has openly declared his intent to be a political rival to Putin, which can best be described as an “interesting” tactic. (Read: is he out of his mind?) A potentially less obvious reason has to do with the setup of Russian oil companies. Yukos and Sibneft (another Russian oil company) are in the process of a merger, and the combined company would be producing something like 2.3m barrels per day, making them (so I’m told) the 6th largest oil producer in the world. This would be a hell of a thing to have in the hands of a political rival.
On top of this, Russia is planning to build a major pipeline from Usa (a major west Siberian oil production site) and possibly a few other sites to Murmansk. Murmansk is a deepwater port above the Arctic Circle, which has some rather unique features among all of Russia’s ports. The Gulf Stream keeps it navigable year-round; it’s deep enough for the largest ships in the world to enter; and it’s the center of Russia’s Northern Fleet, probably Russia’s most advanced port anywhere. Also, it’s conveniently located for trans-Atlantic shipping traffic… Construction is scheduled to begin in 2004.
So it looks like Russia is going full-scale into the oil business, with an eye towards supplying America in particular. Looks like a good move – something that will pull them out of the economic mess they’re still in, and suddenly strengthen them considerably.
Anyway, at the same time as all of this: It looks like some interesting new political friendships are being made, all tied in therewith. The Russians and the Americans are talking a good deal more about “strategic cooperation” – both oil and intelligence. (Apparently some of their experts on Chechnya are coming over to Iraq to give advice. Whether Chechnya is a good model remains to be seen, but the Russians most certainly have people who know their shite about Central Asia…) Ariel Sharon has been visiting in Moscow in the past few days, too – purpose unspecified, but Israel has been moving over much more towards Russian oil supply lately (for obvious reasons). Also, if Russia and America are becoming good buddies, and as the Russians start to see themselves more and more aligned against the Islamic groups in the area, security cooperation starts to be a real possibility – something that could be a real win for both Israel and Russia, since Russia has direct knowledge of the insides of several local governments (which were former Soviet satellites) and Israel has much experience acting as a tech and finance junction point for odd little setups like the Russians and Americans are doing now, (Remember Iran-Contra?) as well as the usual goodies they have to offer. (Fancy new bits of technology, access to American markets, etc.)
Conclusions: It looks like Putin has decided to play Russia’s oil resources into a powerful and semi-secretive relationship with America, and possibly even Israel, that could restore a good deal of its geopolitical clout in the form a “special relationship” that gives them more or less unlimited freedom to act in their geographic sphere, now as close allies of the US. The things to watch in this regard are (a) new oil pipelines from the Caspian to Turkey and from Siberia to Murmansk, and (b) increased US-Russian intel and military cooperation. Potentially a rather handy win for all sides.
But: How much do y’all want to bet that the profits from all of this on the American side will be going disproportionately into a couple of, shall we say, well-connected companies? Sheesh.
Yonatan Zunger’s Blog 