ENERGY TRANSIT, GEORGIA, RUSSIA AND THE EU POLICY OF PROXIMITY

Jomhuri-ye Eslami website
April 8 2009
Iran

Introduction

The European Union, with more than 450 million people and as one
of the main economic and political centres of the developed world,
has its own special international attachments and interests. Due to
security, political and economic reasons, those countries neighbouring
the EU have a special significance for the Union. In the opinion
of the [European] Union, these countries should be supported in the
development of their stability and their democratisation process for
political and security reasons and they should enjoy fundamental
ties with the EU from an economic point of view. In other words,
this region plays a specific peripheral role for the Union.

This applies to the countries on the Mediterranean Sea, and also
those republics which broke away from the former Soviet Union, in
particular Ukraine, Moldavia and the three countries of Caucasia. The
proximity policy of the EU regarding Georgia should also be seen in
this way. Amongst the republics of the Caucasus, Georgia enjoys a
geo-strategic and economic position, and because of its seriousness
in carrying out democratic reforms, creating a free economy and its
attempts to cooperate with and join NATO and even the EU, it enjoys
a more superior position. Georgia presents an important lesson
for Europe’s proximity policy. It is a country whose geography,
history and culture is European in many aspects. This country’s
role as a route for the transit of energy, its close proximity to
Russia and the complex confrontations with Russia have given this
country a special strategic importance. The present government in
Georgia sees itself as committed to democracy and reforms, and has
demonstrated an ever-increasing determination to become a part of the
European club. However, due to domestic and foreign considerations
and restrictions which come with accepting Georgia’s membership
in the EU under current conditions, instead of proposing talks,
acquiring membership in Europe’s proximity policy has been proposed
as a shortcut for bringing countries such as Georgia in line with the
EU. This policy, on the one hand, covers the interests and special
considerations of the EU, and on the other secures the coordinated
interests of the EU’s neighbouring countries, including Georgia. This
is despite the fact that countries like Georgia, and even Ukraine, have
persistently called for the start of talks on membership of the EU.

With regard to neighbourhood proximity of Azerbaijan and Armenia with
Iran, and the interests that Iran has in this region and its links
to it, the future relations of Iran with this region will also be
influenced by issues such as the security of energy, transport and
communications. For this reason, the subject of this article may
have more significance for the Iranian readers. The main question
raised in this article concerns the challenges of the EU’s proximity
policy in Georgia, and in particular the energy policy. Consequently,
the assumption of this study is the EU’s energy policy in particular
the Nabucco plan and project for the transfer of gas resources from
the Caspian region and the Middle East to Europe, and the removal of
Russian monopoly for supplying consumer gas to the EU.

Security challenges of Georgia, Russia

The increase in tension between Russia and Georgia in the years
1385, 1386 and 1387 [2006-07, 2007-08, 2008-09] arose from Russia’s
imposition of a trade war on Georgia and the counter accusations by the
Georgian government that Russia was interfering in Georgia’s internal
affairs. In order to exert pressure on Tbilisi, the Russian government
banned the export of Georgian goods to the Russian market. In return,
the Georgian government, in addition to criticising Russia for
supporting the separatist republics of South Ossetia and Abkhazia,
arrested a number of Russian officers residing in Georgia as spies,
and eventually threw them out of Georgia.

These tensions over recent years brought about the confrontation
in Mordad of last year [August 2008] between Russia and Georgia. It
began with Georgia’s attack on South Ossetia and Russia’s response,
and showed that the conflict of interest and the confrontation of
the West with Russia in this region will continue, and both sides
will try by using anything within their reach to broaden their own
realm of influence and restrict that of their rival. In other words,
instead of being a win-win situation, which can usually be managed
peacefully, the game in South Ossetia became a win-lose situation with
the algebraic outcome of zero. Georgia’s punishment by Russia and, in
return, America’s threats to expel Russia from the G8, the worsening
of relations between NATO and Russia and the announcement by the EU
and America of solidarity with Georgia, in effect demonstrated that
because of the security of energy supplies to the West, access to the
energy sources of the Caspian Sea and, in an even wider perspective,
competition with China, this strategic region is of vital importance
to the West. Likewise, Russia is also trying to preserve at least
some of its previous influence in the region by opposing the spread
of NATO. In fact, the recent confrontations in South Ossetia and the
reaction of both sides demonstrate the complexity of the political,
economic and security environment of this region from domestic and
international aspects, and it seems that with the kind of balance
of power that exists between the West and Russia in the region,
the current unstable situation is set to continue in the near future.

In fact, Russia’s insistence on keeping its forces in Georgia and even
Armenia is not only to preserve Russia’s security interests, rather
the matter of the oil and gas pipelines passing through Georgia to
Europe and the reduction in Russia’s dominance over these countries
due to the decrease in their need to import energy from Russia will
in the long term decrease to a minimum traditional Russian influence
in the region and will instead greatly increase the influence of the
EU and its strategic partner America. So Russia’s opposition to the
proposed trans-Caspian and Nabucco gas pipelines should be analysed
from this point of view.

New political developments in Georgia, increasing tension in Russia-EU
relations

One of the most important developments over recent months in Georgia’s
domestic and foreign polices has been the holding of early presidential
elections in Georgia on 16th Dey 1386 [5th January 2008], which ended
in victory for Mikheil Saakashvili. In fact these early elections
were held one year before the scheduled time following pressure
from the opposition and their widespread demonstrations in Aban 1386
[November 2007]. The Georgian government accused the opposition of
working with Russia as an interfering force in Georgia.

Naturally, the Russian government wanted Saakashvili’s opponents to
win the elections. Yet, coming together of the interests of Russia
and the opposition cannot be the reason for their affiliation with
Russia because in any society the different social forces have
different interests and likings and the policies of the governments
cannot keep all of the social groups completely satisfied. So the
policies of opening up the economy, fighting corruption, attracting
foreign investment, calling for membership of NATO and joining the
transatlantic institutions created some discontent amongst the people
of Georgia, and whilst in the presidential elections of 1382 [2004]
Saakashvili won 96 per cent of the votes, in the recent elections
he could garner only 53.47 per cent votes. In other words, in four
years he had lost 43 per cent of his supporters. The low per capita
income, the extent of the population living under the poverty line
and the relative continuation of administrative corruption, which was
inherited from the communist system, placed a considerable section of
the Georgian people in opposition to Saakashvili’s government despite
the notable economic successes it had enjoyed.

It would appear that, in keeping with its proximity policies and in
addition to its current economic assistance for implementing economic
projects in Georgia, the EU needs to set aside more preferential
tariffs for Georgian goods and invest further in that country. For
one thing is unavoidable, the economic problems must be solved in
order to prolong political stability and the political and economic
reforms in Georgia. If the economic problems such as joblessness,
poverty and low per capita income are not solved, it is possible
that the stability required by the EU in Georgia will be destroyed,
and this is not in keeping with the EU’s proximity policies. For this
reason, the victory of the supporters of the West in the elections of
16th Dey 1386 [5th January 2008] was another suitable opportunity for
the EU’s proximity policy in order to encourage democracy and current
economic development in Georgia and prevent the return to power of
Russia’s supporters in Tbilisi. It should be mentioned that after
the results of the recent presidential elections in Georgia had been
announced, the opposition to the president under the leadership of
Levan Gachechiladze [chairman of the newly founded New Right Party],
who won 26 per cent of the votes, claimed that cheating had taken place
in the elections and embarked on demonstrations in protest calling for
a recount of the votes. These actions could have led to instability
along the route of the energy pipeline to the EU. For this reason,
current developments in Georgia are being carefully followed by the
EU, America, Russia and even Georgia’s neighbours. Saakashvili’s
victory and the continuation of democratic reforms in Georgia are
in keeping with the EU’s proximity policy and are supported by
the Union. Also, observers from the Organization for Security and
Co-operation in Europe described these elections as a positive step
towards democracy, although it did not mean the complete approval of
the way the elections were held. It should not be assumed that the
results of these elections indicate a long-term guarantee for the
continuation of stability in Georgia.

These developments came about at the same time as foreign relations
between Georgia and Russia became strained, resulting in the
expulsion of both Russian and Georgian diplomats. The recent
presidential elections in Georgia ended in victory for Saakashvili,
and Saakashvili’s government once again described the opposition as
elements supporting Russia. It is possible that this claim is not
entirely true, but more important than this, are the indications of
the internal struggle between the pro-Russian and pro-West leanings
in the domestic and foreign policies of Georgia which became more
evident in the recent war. Furthermore, the competition between
Russia, the EU and America in the region and the Balkans intensified
following Kosovo’s proclamation of independence on 28th Bahman 1386
[17th February 2008] which had the complete backing of America and the
EU but which brought about the dissatisfaction of Russia and Serbia as
Russia’s strategic ally in the Balkans. In return, Russia reacted to
the West’s move in the Balkans (Kosovo) by giving more support to the
increasing relations between the two separatist regions of Abkhazia and
South Ossetia. In Farvardin 1387 [March 2008], it announced that the
Russian administration organizations would create more representatives
in this region than there had been previously, and it would increase
the number of Russian soldiers stationed on the borders of Georgia,
South Ossetia and Abkhazia, who were there as peacekeeping forces,
in order to support the Russian citizens living in these regions
against threats from the Georgian military.

Furthermore, bearing in mind the recent war which resulted in the
announcement by these two regions of their independence from Russia,
these policies have added to the problems involved in finding a
solution to these confrontations which have reached a deadlock. These
actions by Russia were met with a harsh response from Georgia, the
EU and America and led to the dispatch of American warships to the
Black Sea.

New developments in Caucasus region focusing on energy issue

Another development which is closely linked to Europe’s proximity
policy is the operation and inauguration of the Baku-Tbilisi-Erzurum
pipeline in 1386 [2007]. This gas pipeline runs parallel to the
Baku-Tbilisi-Ceyhan oil pipeline and is the first gas pipeline to
transfer gas from the Caspian Sea region to European markets through
Georgia and Turkey. The importance of this line for the EU is that it
can be the springboard for diversity in the supply of energy to Europe
and also can prevent hegemonic control of the European gas market
by the Russian Gazprom company. This pipeline came into operation
in 1386 [2007] and has a capacity of 7.7bn cu. m. per year, and,
according to Richard Pegg, an authority at British Petroleum (and
the administrator of the project), in the second phase the capacity
of this pipeline could be expanded to up to 20bn cu. m. a year.

In order to provide energy to Europe, the proposed Trans-Caspian
pipeline is being followed through by America and the EU. According to
this project, gas from the Central Asian countries will be transferred
to Europe and the West under the Caspian Sea and through Azerbaijan,
Georgia and Turkey. American Deputy Assistant Secretary of State
[for European and Eurasian affairs] Matthew Bryza, in a visit to
Azerbaijan in mid Khordad 1386 [May-June 2007], emphasised that the
transfer of natural gas from Turkmenistan to the European markets
through the Trans-Caspian pipeline will be 50 per cent cheaper than
the proposed route of Turkmenistan-Kazakhstan-Russia. He believes that
the realisation of the Trans-Caspian project will create diversity in
supply, control prices, increase Europe’s energy security and prevent
Russia’s monopoly of the EU’s energy market. The importance of this
pipeline in the competition between the great powers, including the EU,
for access to the energy resources of the Caspian Sea was emphasised
once again in 1386 [2007-08] by the signing of the contract for the
transfer of gas from Turkmenistan and Kazakhstan to Russia through a
pipeline running along the Caspian Sea in Ordibehesht 1386 [April-May
2007] by Putin, Nazarbayev and Berdymukhammedov. Turkmenistan’s
president Berdymukhammedov did note, however, that the signing of
this agreement would not mean the cancellation of the Trans-Caspian
pipeline project, because the Central Asian countries also want
diverse pipelines for the export of gas and oil and do not want to
be dependent on one country.

This issue also affects Iran’s interests and its geo-economic
position. Bearing in mind their strained relations with Iran, America
and the EU do not want the Caspian Sea gas and oil pipelines to pass
through Iran. Georgia’s position as a transit state and the existing
tension between Iran, the EU and America has meant that Georgia has
become increasingly important for the West. The Nabucco gas pipeline
project also, which is meant to transfer gas from the Caspian Sea
region, Iran and even some of the countries in the Middle East to
Turkey, Bulgaria, Romania, Hungary, Austria and then to western Europe,
has not been unaffected by the tensions between Iran and the West. Some
of the countries involved in the Nabucco project want to rely only on
gas from the Caspian Sea region for the implementation of the project,
but others, noting Iran’s huge resources of gas as the country with
the second largest gas reserves in the world, stress the need to
use Iran’s gas alongwith that from the Caspian region in order to
provide gas for the Nabucco pipeline. Be that as it may, as a country
with energy reserves, and also bearing in mind its geo-strategic and
geo-economic situation, Iran can play a more active role in the future
of Europe’s energy market and be a serious rival for Gazprom in Europe.

In this regard on 15th Bahman 1386 [4th February 2008], in a new
development, in addition to the five original partners involved
in the Nabucco project, the German natural gas company officially
joined the Nabucco project at a formal ceremony in Vienna attended
by the original five partners and Turkey’s minister of energy and
natural resources Hilmi Guler. This development lent even greater
importance to this project which will extend to western Europe. It
is worth noting that a few days after this ceremony, in a meeting
of the presidents of France and Romania; France’s national [gas]
company expressed its desire to join the project.

Conclusion

>From a general and historical perspective, the rivalry between Russia
and the West in the Balkans, the Caucasus and Central Asia, which
was known as the Great Game in the 19th century, has continued in
another form following the break-up. In order to decrease the speed
at which the influence of the West is gaining ground in this region,
and particularly in Georgia, Russia is using the separatist regions
as a tool to curtail Georgia’s move towards the West and especially
towards membership of NATO, a subject which was discussed at the
summit in Romania by the NATO heads.

In this regard, the Shanghai Cooperation Organization, which Iran
attends as an observer member, may be seen as an organization which
can reduce the influence of the West in Central Asia and the Caspian
Sea region. The competition over the construction of the energy
pipeline from China to the east in Central Asia, the efforts of
Russia to get these lines built across Russia to the West, and the
efforts of the EU and America to undermine the influence of Russia and
China in these regions, should be looked at from the point of view
of the geo-political and geo-economic struggles of the big global
and regional powers. Russia’s attack on Georgia, and, in response,
America’s threat to expel Russia from G8, the worsening relations
between NATO and Russia and the announcement of solidarity by the EU
and America with Georgia, in effect demonstrate that this strategic
region is of vital importance to the West because of the need to
secure the supply of energy to the West and have access to the energy
resources of the Caspian Sea region, and even in a broader perspective
because of the rivalry with China. As was mentioned, Russia is trying
to keep at least some of its former influence in the region by opposing
the spread of NATO. The recent confrontations in South Ossetia and
the reactions of both sides show the complexity of the political,
economic and security environment of this region from both domestic
and international aspects. It would seem that with the kind of balance
of power that exists in the region between the West and Russia, the
current instability is set to continue in the near future. Therefore,
with this brief perspective of the rivalries existing in the region, it
would be in Iran’s long-term national interests to pay more attention
to influencing these developments in line with its own interests.

The Centre for Strategic Studies

Hamid Rahnavard

The role of Georgia as a transit route for energy, its close proximity
to Russia and the complex confrontations between them has lent a
special importance to this country.

The present government in Georgia sees itself as committed to democracy
and reforms and has demonstrated an ever-increasing determination to
become part of the European club.