GEORGIA CONFLICT STOKES ENERGY SUPPLY CONCERNS
By George Jahn

The Associated Press
10 Hours Ago

VIENNA, Austria (AP) — Russia’s conflict with Georgia could punish
the European Union where it is perhaps most vulnerable: Oil and gas
supplies from beyond its eastern frontier.

The EU has been trying to wean itself away from energy dependence on
Moscow, which supplies a quarter of its oil and half of its natural
gas, by developing routes for Central Asian resources that bypass
Russia.

A key to this strategy is a network of energy routes that run through
Georgia, notably the Baku Tbilisi-Ceyhan oil pipeline that was almost
hit by a Russian bombing raid Monday.

No supply disruptions were reported and oil prices actually dipped. But
the near-miss brought to stark relief how the conflict, which includes
the prospect of a major Russian power grab in Georgia, could wreak
havoc with the West’s hopes of diversifying its supply sources.

The United States and the EU have become increasingly alarmed at
how a resurgent Russia is using its vast energy wealth as a tool for
expanding its influence — and getting its way — on the world stage.

"The EU grand strategy is to develop Georgia as an alternative route
for Caspian oil and gas by bypassing Russia," says Michael Klare,
author of "Rising Powers, Shrinking Planet, the New Geopolitics
of Energy."

"But if Georgia is no longer a safe passageway, then all of these
schemes for diminished dependency on Russia go up in smoke."

In these energy-hungry times, Georgia already plays a growing role
in bringing supplies from energy-rich Central Asian nations like
Azerbaijan, Turkmenistan and Kazakhstan to Western countries seeking
to circumvent Russia.

The Baku Tbilisi-Ceyhan line provides 1 million barrels of Caspian
crude to international markets from suppliers independent not only of
Russia but also OPEC. Lesser amounts flow through the Baku-Supsa line,
which ends on the Black Sea.

And Georgian ports on the Black Sea are a main shipping point of
Caspian crude from Azerbaijan, Turkmenistan and Kazakhstan. More than
500,000 barrels leave these ports daily, and plans are afoot to expand
capacity by an additional 200,000 barrels a day.

Gas also transits Georgia toward the West.

The Baku-Tblisi Erzurum pipeline connects Azerbaijan to Turkey through
Georgia, en route to European consumers. Annual shipments of more than
6.5 billion cubic meters will be nearly tripled once the pipeline is
expanded in the coming years.

Georgia also holds enormous symbolic significance in the West’s
struggle to diversify.

In comments earlier this year, Steve Levine, author of "The Oil and
the Glory" called the Baku-Ceyhan pipeline "the first significant
break in Russia’s previous monopoly control over all oil and natural
gas from the Caspian Sea states."

"Now Russia no longer calls the shots with impunity," said
Levine. "Azerbaijan and Georgia, for example, rely on this pipeline
… for the political independence they often act out."

Klare traced Georgia’s strategic importance to the U.S. and its
European allies to a decision by former U.S. President Bill Clinton
to choose Georgia as "an alternative pathway for the flow of Caspian
oil and gas to the West."

With the struggle over energy sources intensifying over the last
decade, that move by the Clinton administration provides essential
background to the current conflict, said Klare.

"Georgia has been one of the leading recipients of U.S. military
aid ever since," he told The Associated Press. "This, of course,
infuriated the Russians and they determined to try to curb Georgia’s
ties to the West in any way they possibly could."

The Russian weapons of choice, said Klare, were South Ossetia —
where the fighting originated — and Abkhazia.

In both of the predominantly ethnic Russian breakaway Georgian regions,
the Kremlin established an armed presence — pointing "daggers into
the very heart of Georgia’s independence," says Klare.

And the fighting could spread into Abkhazia — with worrying
implications for Europe, which hopes to expand Georgia’s importance
as an energy transit route independent of Moscow.

Still to be built, the EU’s Nabucco pipeline is meant to transport
non-Russian gas and go through territory independent of Moscow,
making Georgia an ideal candidate.

An alternative to Georgia would be Armenia. But it, too, has problems
with a breakaway region — the ethnic-Armenian Nagorno Karabakh
enclave in neighboring Azerbaijan. Simmering tensions there could
flare, drawing in Armenia — and Russia, which continues to regard
the region as part of its sphere of influence.

"Nagorno Karabakh is as difficult to solve as Abkhazia and South
Ossetia," says Klare. "And Russia can mess that one up too."