BC-Energy Empire, Adv21,0965 Adv21
For release Wednesday, April 21

After military retreat, Russia flexes economic muscles in
neighboring countries

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AP Photos NY355-356 of April 12

By STEVE GUTTERMAN
Associated Press Writer
TBILISI, Georgia (AP) – Several miles from the stately palace
where the czar’s envoy once governed Georgia sits a nondescript
office building in a grimy industrial district.
Drab it may be, but for some Georgians it symbolizes new Russian
power in their country, a land that spent nearly two centuries
under Moscow’s rule before becoming independent with the 1991
Soviet collapse.
The building is the headquarters of Telasi, a Russian-owned
company that provides this city of 1.3 million people with
electricity – a precious commodity in a country where blackouts are
a part of daily life.
It’s just one of the tendrils of Russian economic influence that
reach across Georgia and the rest of the former Soviet Union.
Using pipelines and power lines instead of tanks and troops,
President Vladimir Putin’s Russia is seeking to strengthen
influence over former Soviet republics at a time when the United
States and European Union are extending their presence eastward to
places that until recently were Moscow’s domain.
That change is highlighted by the entry of the three formerly
Soviet Baltic states into NATO and the European Union.
“Russia did not want, does not want and never will want to lose
its influence in the post-Soviet space,” said Ramaz Sakvarelidze,
a political analyst in Georgia, where Moscow has pledged to close
two military bases left from the Soviet era.
“And now that its economy has not only gotten on its feet but
is able to act outside its borders, Russia is replacing its
military levers of influence with economic structures.”
Telasi is a case in point, he said.
Russia’s huge state-controlled electricity monopoly, Unified
Energy Systems, bought a controlling stake in the Tbilisi utility
last year from the U.S. power company AES.
Georgian politicians protested the deal would give Russia a
powerful political lever over their Caucasus Mountain country.
Russia already controlled nearly all natural gas supplies to
Georgia, where steam heating delivered to entire city neighborhoods
is only a memory and many people rely on gas-fired heaters to warm
homes in winter.
Georgia hopes a U.S.-supported natural gas pipeline from the
Caspian Sea to Turkey will ease its dependence on Russia, but it’s
not expected to be built before 2006.
UES chief Anatoly Chubais flew to Georgia last August and sought
to reassure authorities over the Telasi purchase, saying the
company had no political goals and Georgia’s electricity supplies
would be secure.
But critics questioned the company’s motives for buying a
utility whose chances of making a profit are diminished by decrepit
equipment, corruption, poverty and what U.S. Ambassador Richard
Miles called “an innate dislike on the part of Georgians to pay
for energy.”
Miles said the American company decided to sell because it
couldn’t afford “the hemorrhaging of money.” But he said the
issue of why UES bought Telasi was “a good question.”
UES is clearly trying to expand its presence in former Soviet
republics, a campaign that Miles said could be motivated in part by
the simple desire to grow and by the hope of future profits. “What
other political motives there might be, I don’t know. You’d have to
ask Mr. Putin and Mr. Chubais about that,” he said.
Yevgeny Volk, head of the Moscow office of the Heritage
Foundation, said there is no secret to UES’s activities abroad.
“It’s practically part of the state apparatus, and naturally
the policy it pursues is state policy – and that is to strengthen
Russia’s position in the zone traditionally considered its sphere
of interest,” he said.
UES, which exports power to countries from Norway to China, says
its foreign business is coordinated with the government and
conducted in the interests of its shareholders, the largest of
which is the state. It says company experts even advise the Foreign
Ministry on policy.
Volk said UES and other Russian companies with close ties to the
government are trying to acquire property in former Soviet
republics “and then use that property as a political lever to
influence the situation in those countries to Russia’s benefit.”
Sakvarelidze and other analysts said that will allow Moscow to
influence personnel and policy decisions in those countries,
shaping their future in line with its own interests.
In February, Russia’s state-connected Gazprom briefly halted
natural gas supplies to Belarus during a dispute over Russian
efforts to gain control of Belarusian industrial enterprises,
including the pipeline company that relays Russian gas to Europe.
In December, the Russian state-owned oil pipeline monopoly,
Transneft, stopped deliveries to the Baltic Sea port of Ventspils,
Latvia. Latvian officials said Moscow was arm-twisting as part of
an effort to buy the Latvian government’s stake in the company that
loads oil onto ships bound for the West.
Also last year, Armenia ceded control over its only nuclear
power plant to UES in a bid to escape debts to Russian energy
suppliers.
Volk said Russia’s activity is a reaction to increasing U.S. and
European influence in the region.
“There’s no question of returning these countries to Russia or
to some sort of Soviet Union. Everyone understands that’s
impossible politically,” he said. “But to bind them more closely
to Russia and provide Russia with advantages in this economic space
… this is a completely realistic policy.”

APTV 04-12-04 2109EDT

From: Emil Lazarian | Ararat NewsPress