RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
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RFE/RL Russian Political Weekly
Vol. 6, No. 10, 12 May 2006

A Weekly Review of News and Analysis of Russian Domestic Politics

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HEADLINES

* PLANE CRASH REVEALS CRACKS IN MOSCOW-YEREVAN TIES
* EU MAINTAINS CODEPENDENT ENERGY RELATIONSHIP WITH RUSSIA
* THE RECURRING FEAR OF RUSSIAN GAS DEPENDENCY
* INTERVIEW: WILL RUSSIA’S OIL WINDFALL GO TO MILITARY?
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PLANE CRASH REVEALS CRACKS IN MOSCOW-YEREVAN TIES. The fatal crash of
an Armenian airliner near the Russian resort town of Sochi on May 3
has revealed tensions in the usually warm relations between Yerevan
and Moscow.
Many in Armenia believe the crash — the worst in
Armenia’s history, with 113 deaths — was the result of poor
recommendations by Russian air-traffic controllers. But such claims
may only be the cover for deeper concerns about the impending advance
of the Russian gas giant Gazprom and growing racism in Russia
directed in part at natives of the Caucasus.
Hmayak Hovhanisian, the chairman of the Armenian Association
of Political Scientists, says it is too early to tell if the
controversy will have a lasting impact on relations between the two
countries.
“It depends on how the investigation proceeds,” he notes. “If
the black boxes aren’t recovered and the real causes of the
disaster aren’t explained in a way that is clear for everyone, it
will have a negative effect on Russian-Armenian relations.”
Recovery work is continuing following the May 3 crash of the
Armenian Airbus A320. So far divers have located fewer than half of
the 113 victims, the vast majority of whom were Armenians.
The concurrent investigation into the crash is ongoing as
well, under the joint supervision of Russian Transport Minister Igor
Levitin and Armenian Defense Minister Serzh Sarkisian.
But so far few clues have been revealed about the probable
cause of the crash. Without the black-box flight recorders,
investigators lack critical information about the flight crew’s
actions in the moments before the plane nose-dived into the Black Sea
off the Sochi coast.
The lack of information has angered Armenians, who believe
the pilot may have crashed after being told by Russian air-traffic
controllers to resume preparation for landing despite poor weather
conditions. Georgian air officials had earlier recommended the plane
turn back.
While observers like Hovhanisian note that the responsibility
for final decisions ultimately rests with the pilot, and not the
air-traffic controllers, many Armenians — including those in the
political opposition — are concerned by Russia’s role in the
crash. They have also expressed doubt that an investigation led in
part by Russia will be fully honest.
Russia and Armenia have long enjoyed strong strategic ties.
Russia maintains a military base on Armenian soil, and the two
countries are partner to a landmark treaty in which Moscow has
committed itself to defend Armenia militarily in the event it is
attacked from outside — an apparent reference to its historic enemy,
Turkey.
It has also helped to prevent further outbreaks of violence
between Armenia and Azerbaijan over the Nagorno-Karabakh enclave.
Armenia has also remained a loyal member of both the
Commonwealth of Independent States (CIS) and the CIS Collective
Security Treaty. This is something that sets Armenia apart from its
disgruntled South Caucasus neighbor Georgia, which has tense
relations with Moscow and has threatened to withdraw from the CIS.
But many Armenians remain resentful of Russia. This is due in
part to what is viewed as mounting racism in Russia. Skinheads were
believed to be behind the killing in April of a 17-year-old Armenian
in Moscow.
Many Armenians also accuse Russia of seeking to monopolize
the country’s energy industry. Eduard Aghajanov, an independent
political analyst in Yerevan, says Russia is not treating Armenia
like an equal partner.
“Many already don’t believe that [Russia] is a ally,
because the way Russia deals with Armenia in its foreign policy is
not the way a strategic partner would behave,” Aghajanov says.
“It’s the way it would treat a vassal.”
Armenia recently agreed to hand over a portion of its state
energy assets to Russia’s state-run gas giant Gazprom, in order
to prevent a threat to double gas prices. Gazprom has raised
natural-gas prices for nearly all of its CIS clients this year, but
Armenia, due to its compliance, saw a hike of just 10 percent.
Gazprom is now set to assume control of a major Armenian
power plant, and may also obtain a controlling share of a planned
Armenian-Iranian gas pipeline. The deal is expected to give Moscow
near-total control over the Armenian energy sector.
Observers in Russia are more sanguine about the deal. Boris
Makarenko, deputy director of the Moscow-based Center for Political
Technologies, says Gazprom’s policy in Armenia is no different
than those in other countries.
Makarenko says anti-Russian sentiment has recently become
more “fashionable” in Yerevan. But on the whole, he adds, relations
between Moscow and Yerevan can be held up as an ideal in the CIS
neighborhood. “Speaking objectively, Russia has fewer problems in
relations with Armenia than with any other post-Soviet state,” he
says. (Valentinas Mite)

EU MAINTAINS CODEPENDENT ENERGY RELATIONSHIP WITH RUSSIA. The
European Union’s apparent dependence on Russian oil and gas
imports has been the source of much debate in recent months, as
Moscow has shown its willingness to wield its influence as an energy
supplier for political gain. But at a high-level conference on energy
security held in Brussels on May 10, senior European officials noted
that Russia will need massive injections of foreign capital to retain
its dominant position as a supplier to Europe’s energy market.
BRUSSELS, May 11, 2006 (RFE/RL) — It is clear that when it
comes to the energy trade, Russia and the EU are mutually dependent
on each other.
The EU looks to Russia for 30 percent of its oil imports and
about half of its imported gas. Russia’s economy, meanwhile, is
fueled to a great extent by the revenue it generates by exporting
energy to Europe’s massive energy market.
Likewise, while recent threats by Russia to look east for
future gas and oil exports have made EU legislators nervous, some
attending yesterday’s conference on energy security noted that
Russia will require foreign investment to keep up with rising EU
energy needs.
Among those in attendance was former Russian Prime Minister
Mikhail Kasyanov, who said Russia must take “urgent action” to avoid
a sharp decline in its output of natural gas. However, he said,
Russia’s recent efforts to establish greater central control over
“strategic” assets have damaged the country’s investment climate.
“That creates a big problem for [the] overall investment
process, [for] those investments which [are] badly needed in Russia
right now, so [as to] raise the production of energy to satisfy our
internal and general European demand,” Kasyanov said. “[The] lack of
different foreign investment is much more risky for Russia since it
badly needs capital to be invested in the national energy sector.”
Senior European Commission official Christian Cleutinx
estimated that by 2020, the EU’s energy needs will rise by 200
million metric tons of gas per year. But he says that according to
Russia’s most recent energy strategy, the country envisions
expanding its total level of gas exports by just 50 million metric
tons by that time.
Cleutinx says that amount would meet only a quarter of
Europe’s future needs, not taking into account Russia’s other
export markets.
“So, you see immediately the big difference there is between
the exports that Russia on the basis of the current plan can deliver
into the world markets — because we’re not talking about 50
[million] tonnes of oil equivalent [going only] to Europe, it’s
to the CIS, to Turkey, it be might the United States, and we need an
increase of 200 [million tonnes],” Cleutinx said.
Cleutinx estimates that Russia would need $200 billion to
meet its export targets. Overall, the European Commission says Russia
would need $735 billion to modernize its energy sector by 2020. (Ahto
Lobjakas)

THE RECURRING FEAR OF RUSSIAN GAS DEPENDENCY. U.S. Vice President
Dick Cheney’s recent criticism of Russia for using natural gas as
a political weapon is by no means new. Similar charges leveled 24
years ago during the Cold War resulted in an embargo on the sale of
gas-extracting equipment to the Soviet Union and to the U.S. Central
Intelligence Agency’s (CIA) purported destruction of a Soviet gas
pipeline.
In 1982, as the Soviet Union was beginning construction of a
$22 billion, 4,650-kilometer gas pipeline from Urengoi in northwest
Siberia to Uzhhorod in Ukraine with the intention of supplying
Western Europe, the CIA issued a National Intelligence Estimate (NIE)
titled “The Soviet Gas Pipeline in Perspective.”
The NIE, regarded as the definitive product of the U.S.
intelligence community, reached several conclusions, among them that
the Soviet Union “calculates that the increased future dependence of
the West Europeans on Soviet gas deliveries will make them more
vulnerable to Soviet coercion and will become a permanent factor in
their decision making on East-West issues.”
In addition, according to the NIE, the Soviets “have used the
pipeline issue to create and exploit divisions between Western Europe
and the United States. In the past, the Soviets have used West
European interest in expanding East-West commerce to undercut U.S.
sanctions, and they believe successful pipeline deals will reduce
European willingness to support future U.S. economic actions against
the USSR.”
The Urengoi gas field, located in northwest Siberia’s
Yamalo-Nenets Autonomous Okrug, was one of the largest Soviet gas
fields. The main customers for Urengoi gas were West Germany, France,
and Italy.
The initial volume of the pipeline was to be 40 billion cubic
meters per year, which would mean that Soviet gas could account for
30 percent of German and French gas imports, and 40 percent of
Italy’s. Such figures were approaching a dependency level too
great for the White House to accept.
Washington apparently dealt with these concerns in a direct
manner initially. In January 1982, U.S. President Ronald Reagan
purportedly approved a CIA plan to sabotage a second, unidentified
gas pipeline in Siberia by turning the Soviet Union’s desire for
Western technology against it. The operation was first disclosed in
the memoirs of Thomas C. Reed, a former Air Force secretary who was
serving in the National Security Council at the time. In “At the
Abyss: An Insider’s History of the Cold War,” Reed wrote:
“In order to disrupt the Soviet gas supply, its hard-currency
earnings from the West, and the internal Russian economy, the
pipeline software that was to run the pumps, turbines, and valves was
programmed to go haywire, after a decent interval, to reset pump
speeds and valve settings to produce pressures far beyond those
acceptable to pipeline joints and welds.
“The result was the most monumental non-nuclear explosion and
fire ever seen from space,” he recalled, adding that U.S. satellites
picked up the explosion. Reed said in an interview that the blast
occurred in the summer of 1982.
The sabotage operation, however, did not halt the
construction of the Urengoi pipeline. The CIA was forced to revise
its tactics.
Responding to the Soviet leadership’s support for the
1981 crackdown on Poland’s Solidarity movement, Reagan announced
a program of sanctions on companies selling gas-drilling equipment
and turbines for gas-compressor stations to the Soviet Union while
urging European states not to buy Soviet gas.
Officially it was declared that this was in retaliation for
Soviet support for martial law in Poland. But it is also plausible
that the strategy was meant to ease U.S. concerns about the
construction of the Urengoi-Uzhhorod gas pipeline.
The embargo, however, was easier to declare than to
implement.
Norwegian scholar Ole Gunnar Austvik wrote in an article
titled “The U.S. Embargo of Soviet Gas in 1982” that a delegation
under the auspices of the U.S. State Department sought to induce the
Western Europeans not to buy Soviet gas and to choose alternative
sources of energy.
“The arguments in favor of such diversion were close to our
notion of economic warfare, even though the whole range of arguments
was actually used. An economically strong Soviet Union is more
dangerous than a weak one,” Austvik wrote. “The U.S. compensation
package contained two main components; American coal and Norwegian
gas were presented as alternatives to Soviet gas.”
Neither alternative, however, existed. The United States did
not produce enough coal to meet Europe’s needs and even if it
did, the logistics of transporting it there were overwhelming.
Furthermore, at the time Norway’s gas production was not
sufficient to replace Soviet gas. By November 1982, after the United
States increased its grain sales to the USSR, the gas sanctions were
terminated.
Originally, the Urengoi pipeline was projected to go through
East Germany, but the West German government protested and it was
rerouted through Soviet Ukraine. The West Germans were concerned that
in the event of a crisis, the East Germans could turn off the valves
and stop supplies. Soviet Ukraine was seen as the more reliable
transit route.
The 1982 NIE states that the West Europeans’ prime energy
goal at the time was to “reduce their dependence on OPEC,” at the
time a significant Western concern arising from the Organization of
Petroleum Exporting Countries (OPEC) oil boycott of 1973. The oil
crisis that ensued from that boycott may have fueled U.S. concerns
regarding Soviet gas, lest the Soviet Union someday copy OPEC’s
tactic.
In November 1983, the CIA issued another NIE, titled “Soviet
Energy Prospects Into the 1990s,” which, in many ways, foresaw the
current predicament.
“If Moscow lands contracts to supply even half of the West
European gas-demand gap now foreseen for the 1990s, an additional
pipeline…would be required…and dependence on Soviet gas could
approach 50 percent of gas consumption for major West European
countries, far in excess of the 30 percent share that we and some
West European governments regard as a critical threshold for
political risk” the NIE stated. (Roman Kupchinsky)

INTERVIEW: WILL RUSSIA’S OIL WINDFALL GO TO MILITARY? WASHINGTON
May 11, 2006 (RFE/RL) — While Russian President Vladimir Putin
focused on domestic political issues in his annual
state-of-the-nation address to the Federal Assembly on May 10, he did
mention making new purchases of nuclear submarines and boosting the
“procurement of modern aircraft, submarines, and strategic missiles
for the armed forces.”
RFE/RL correspondent Julie A. Corwin asked Brian D. Taylor,
an expert on the Russian military at Syracuse University’s
Maxwell School and author of “Politics and the Russian Army:
Civil-Military Relations, 1689-2000,” to put Putin’s remarks in
context.
RFE/RL: In his annual address, Putin talked about
commissioning two strategic nuclear submarines among other military
expenditures. Is this how Russia is going to spend its new oil
wealth? Does this represent a real commitment to higher military
spending or is this a just bone thrown to the military?
Brian Taylor: He obviously [has been] flush with oil and gas
money over the last few years, and it has shown up in defense
expenditures really starting around 2002 or so. But at the same time
he himself notes in the annual address this year that they
shouldn’t expect to match the U.S. or even countries like France
and Britain in terms of how much they’re outlaying on defense.
There is some need for certain investments in strategic
nuclear forces given that there was very little investment in those
in the 1990s, but it doesn’t mean that we are looking at a new
nuclear arms race. You know, I think it’s probably real that they
are going to be spending more money in this area but it’s nothing
that from the U.S. perspective that should be seen as alarming or
worrying.
RFE/RL: So the procurement budget has already been going up?
Taylor: The procurement budget has been going up — that is
certainly true, but we shouldn’t overestimate the extent to which
things have really sort of taken off. And we also shouldn’t
overestimate what impact that will have on military performance,
because military performance depends on a lot of other things other
than weapons systems.
And he [Putin] didn’t have anything really to say — or
he didn’t have much to say in the speech about that. He talked a
bit about some of the changes in personnel policy in short term of
the draft and getting more NCOs [noncommissioned officers] and
sergeants and that sort of thing.
But that’s been something they have been talking about
for quite some time, too, and it doesn’t seem to have had a big
impact in terms of reducing certain dysfunctional elements of serving
in the Russian military, like hazing and death from suicide and death
from accidents and the fact that most people don’t want to send
their kids to serve in the military.
RFE/RL: Why not use some of the oil money to recruit soldiers
and make the army fully professional? Perhaps with the right
recruitment bonus, young men wouldn’t try so hard to avoid the
draft?
Taylor: I think people would come for certain amounts of
money. I mean there are people particularly in rural areas and
certain working-class families who see it as a viable option. So they
have increased the so-called professional component of their armed
forces over time and they’re reducing — in fact they’ve
eliminated in terms of the armed forces sending draftees to Chechnya.
And there is this sort of long-term trajectory towards creating more
professional forces.
But again, this is old rhetoric. I mean if you go back to
[former President Boris] Yeltsin and when he ran for president the
second time in 1996, he was going to end the draft and create a
professional military.
RFE/RL: So what’s the U.S. reaction to this speech likely
to be?
Taylor: I don’t really think the U.S. will respond in any
sort of serious way, rhetorical or otherwise, and I really don’t
think the U.S. should or needs to. If you just look at the trajectory
in terms of nuclear forces, which is the one area in which he made
some specific commitments today, the U.S. is well out ahead of Russia
in terms of developing new systems — in deploying new systems, and
the number of warheads available.
And really we’re in a situation in which the U.S.
probably has a much larger nuclear arsenal than it needs and the
trends are sort of down, over time, and somewhat consistent with
certain arms-control treaties, although those don’t have a lot of
teeth. And Russia is going to continue over time to let the size of
its nuclear force reduce, too, as older systems go offline.
RFE/RL: So in conclusion it sounds like you don’t think
the Russian military will be the recipient of the “oil dividend”?
Taylor: They’re going to be one of the beneficiaries of
an oil-and-gas dividend, but there are other things that Putin wants
to spend the money on, too, He’s got his whole national projects
in terms of education, agriculture, housing, and those sorts of
things. And in terms of delivering voters to his anointed successor
in 2008, if that’s the plan, spending the money on the national
projects seems like a better way to try and attract voters, assuming
that elections matter, than spending it on nuclear submarines.

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Copyright (c) 2006. RFE/RL, Inc. All rights reserved.

The “RFE/RL Russian Political Weekly” is prepared
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