KAZAKHSTAN DROPS PLAN TO EXPORT GRAIN VIA GEORGIA
Paul Goble

Georgiandaily
September 22, 2008
NY

Citing "the situation in Georgia," Kazakhstan’s agricultural minister
said today than Astana will not build a grain terminal in Poti as it
had planned to export Kazakhstan’s grain, a decision that Georgian
officials said had "surprised" them but one that highlights the
emerging balance of forces in the Caucasus and Central Asia.

Akulbek Kurishbayev, Kazakhstan’s minister for agriculture, told the
parliament there that "a letter has been sent to the government urging
it not to go ahead with the investment," adding that "it’s clear that
this is linked to international problems, to the situation in Georgia".

That decision does not extend to oil, at least not yet – Kazakhstan
suspended oil shipments through Georgia when the Russian invasion began
but restored them two weeks ago – but because it suggests the way in
which regional leaders are thinking, it has disturbed many in Tbilisi.

Vakhtang Lezhava, Georgia’s first deputy ministry of the economy,
told Reuters that Tbilisi was "very surprised" by Astana’s decision
to stop the construction of a plant expected to handle up to 500,000
tons a year because "only Kazakh companies decided after the war to
abandon investment plans in Georgia, while others continue to invest
in our country."

If Kazakhstan is in fact the only country to take such a step and
if Kazakhstan and other Caspian Basin countries continue to export
petroleum via Georgia, then the impact of today’s announcement
would be relatively small, but Astana’s decision and especially its
invocation of "instability" as the reason almost certainly will have
a much larger one than that.

First, and especially under conditions of international financial
turmoil, Kazakhstan’s declaration that it has concluded Georgia is
too unstable for investment will undoubtedly lead others to make
similar decisions, and those decisions will put even more pressure
on the Georgian economy and consequently on the Georgian government.

Since the start of the war, Georgia has already suffered a sizeable
although much debated reduction in the amount of transfer payments
from Georgians working in the Russian Federation, and Tbilisi has
the enormous and costly task of rebuilding the country following the
Russian invasion. Consequently, any further cuts in international
direct investment are going to hurt.

Second, and even more important, Kazakhstan’s decision is likely
to lead other countries to decide that they too do not want to move
cargo across Georgia, something that will give Russia a victory in
its drive to punish Georgia and a defeat to the United States and
Europe which have sought to promote just such an East-West route.

If goods flow from the countries of Central Asia and the Caucasus
across the Russian Federation rather than across Georgia, Moscow will
gain leverage in all of these capitals at the expense of the US and
Europe, and if the goods flow from these countries across Iran or
toward China, the West will lose in other ways as well.

And third, and most important of all, Kazakhstan’s decision about grain
is likely to extend to petroleum products, either because Astana and
other oil and gas exporters will decide that Georgia is too "unstable"
for them either on the basis of the current situation or as a result
of one that might be created by a new round of attacks on pipelines
and pumping stations there.

During the course of the Russian invasion of Georgia, various media
outlets distributed photographs of a bomb crater within 100 meters
of the Baku-Tbilisi-Ceyhan pipeline. It did not harm that pathway,
some commentators pointed out, but it demonstrated a capacity to do
so, if Moscow wanted to take that step.

Kazakhstan’s decision thus raises the stakes, possibly tempting Moscow
either directly by means of its own forces to disrupt the pipeline –
unlikely in the short term – or indirectly through the sponsorship of
groups on the ground – including potentially the ethnic Armenians of
Javakhetia, a region in southern Georgia, who are increasingly restive.

However that may turn out to be, it is certain that Tbilisi and
its supporters are not only "surprised" by what Astana has decided
but are very, very concerned about an action that may prove to be
a bellwether of the emerging geopolitics of Eurasia, a geopolitics
in which Russia will play a larger role and the West a smaller one,
with all the consequences that shift will entail.