Moscow wins Georgia gas battle

Agencies in Moscow
Saturday December 23, 2006
The Guardian

Georgia caved in yesterday and agreed to pay more than double current
rates for Russian natural gas after Moscow threatened to cut off
supplies if the new price was not accepted. The development revived
concerns that Russia is determined to use its mineral assets as a
political weapon to intimidate neighbours.

Georgia has complained that it is being punished by Russia for leaning
closer to the west following its 2003 "rose revolution". It has accused
Russia and its state-owned gas group, Gazprom, of "political blackmail"
for raising prices to levels that could threaten the Georgian economy.

The leadership in Tbilisi has been keen to source supplies from
neighbouring Azerbaijan. But the Georgian prime minister, Zurab
Nogaideli, said Azerbaijani gas would not come on stream for several
months at least, leaving the country with no option but to turn back
to Russia. Under yesterday’s deal, prices will more than double to
$235 per 1,000 cubic metres.

Russia’s dealings with its southern neighbour have heightened fears
that it is wielding its formidable energy reserves as a political tool
to cow erstwhile allies. Relations with Georgia hit their lowest point
in years when Georgia briefly detained four Russian military officers
on spying charges this autumn. Moscow retaliated with an economic
and transport blockade and a crackdown on Georgian migrants. Under
President Mikhail Saakashvili, Georgia has become a US ally, pushing
for closer ties with the EU.