Author: Nargizian David

THE IMPACT OF THE RUSSIA-GEORGIA WAR ON THE SOUTH CAUCASUS TRANSPORTATION CORRIDOR
Mamuka Tsereteli

Jamestown Foundation
treports/single/?tx_ttnews%5Btt_news%5D=34654& tx_ttnews%5BbackPid%5D=7&cHash=54b53bf6cc
Marc h 4 2009

Executive Summary

The August 2008 war in the Caucasus revealed the new strategic
realities that have emerged in the Black Sea / Caspian Region in
recent years. These realities have been driven by overly ambitious
Russian policies and have weakened Western strategic interests in the
region. The conditions created immediately after the war appeared more
favorable to Russia and less favorable to other nations in the region,
most notably Armenia, Azerbaijan, Turkey, and Ukraine.

But the world economic crisis and its impact on Russia, as well as the
Russia-Ukraine gas dispute in January 2009, have diminished Russia’s
gains and further damaged Russia’s reputation as a reliable energy
supplier to Europe. In the long run, Russia may face very serious
problems of separatism on its own territory due to Russia’s recognition
of the breakaway provinces of Georgia. Given these uncertainties,
it may be natural to expect that there will be stronger drive to
get away from: 1) dependency on Russian energy in Europe; and 2)
dependency on Russian transit infrastructure in Caspian /Central Asia
region. In the long run, that may be reflected by Russia’s weakened
strategic position in Europe and Central Asia.

The August war in Georgia demonstrated some risks associated with the
functioning of the transit energy corridor in the southern Caucasus. It
also demonstrated the need for broader security guarantees for a
region that is vital to European and global energy security. The
most important finding of the paper is that while the corridor has
a tremendous potential to augment its transit capabilities with new
pipelines, railroads, marine and air ports, the security of the South
Caucasus transportation corridor cannot be taken for granted. Moreover,
Western countries will need to ensure stability and security in the
region in order for the corridor to meet its full potential.

The Russian invasion of Georgia established new strategic realities
in Eastern Europe and Central Eurasia. It was the culmination of
Russia’s impressive comeback in Eastern-European and Central-Eurasian
affairs that has occurred in response to high energy prices, a weak
US strategic position, European division and uncertainty in Turkey’s
strategies. The war made clear that Russia is willing to use force to
deepen and promote its interests, while western powers are not. This
fact was predictable, but not certain to some. The war in Georgia
helped firmly establish this reality and may also indicate that
even NATO members may not be fully protected by their commitment
to that organization. As the Russia-Georgia conflict demonstrates,
military force has once again become a major factor in Russian foreign
policy. Nevertheless, economic provisions and energy incentives are
still the primary tools employed by Russia to further its foreign
policy interests abroad.

At the same time, the weak Western response to Russia actions may
send the wrong signal to the Russian leadership about the level of
freedom it has to use force in what Russia considers its sphere of
influence. Furthermore, the weak economy and the declining popularity
of Russian leaders may create internal instability within Russia and
tempt Russian leaders to once again utilize force to further their
objectives. Europe and the United States need to carefully consider
their policy response to such scenarios.

Another major finding of this paper is that energy is an important
factor in the stability of any country and, in Georgia’s case,
domestic energy security is also the foundation for stability of
transit, and development of the entire regional infrastructure. The
physical damage to the infrastructure and the environment in Georgia
as a result of the war was tangible but not large. The damage to
Georgia’s transportation system is repairable in a relatively short
period of time. The pipelines are gradually approaching pre-conflict
volumes of the oil and natural gas shipments although the shipments
via railway, ports, and air have all shown signs of decline. Instead,
the key problem emerged with the malfunctioning of the largest energy
facility in the country – the Enguri hydro power plant.

The reservoir for the power plant is located on Georgian-controlled
territory while the actual electricity production plant is located
on Abkhaz/Russian controlled territory. The Georgian leadership had
to make a very difficult political decision in accepting the offer
of the Russian company Inter RAO (the subsidiary of the giant Russian
state-owned energy monopoly Inter RAO United Energy Systems (UES)) on
joint operation of the power plant. While there is a positive history
of activities of the Inter RAO UES in Georgia, the Russian state-owned
company’s control of a key electricity supplier for the entire country
is not the best political and economic security outcome for Georgia.

Lastly, the paper argues that the initial damage that the war inflicted
upon the political reliability of the transit corridor is gradually
diminishing and that new opportunities are emerging. The complete
reversal of this damage can be possible but will depend on U.S. and EU
policy, the role of Turkey, internal stability in the Caucasus region,
and Russian policy in Central Asia and the Caucasus. It is important
to remember that when the initial decision to revitalize the energy
corridor through Georgia and Azerbaijan was made in the mid 1990s,
the security environment was extremely difficult and there was no
infrastructure to support shipment of oil through the corridor, yet
leadership of the United States and Turkey supported that decision and
helped to implement it. Today’s environment is much more favorable
considering the functioning infrastructure and greater demand for
Caspian energy.

New natural gas discoveries in Turkmenistan and the next stage in
oil and gas developments in Kazakhstan and Azerbaijan will require
additional export capacity and a tough battle is ahead between
the different export options, each supported by state sponsors with
competing interests. It is significant in this context that Kazakhstan
and Azerbaijan signed an agreement on November 14, 2008, to develop
a Trans-Caspian oil transportation that will include onshore oil
pipeline in Kazakhstan and a tanker fleet in the Caspian Sea to ship
Kazakh oil to the Baku-Tbilisi-Ceyhan (BTC) pipeline and on to the
world markets. As it was indicated at the Budapest summit devoted
to the Nabucco pipeline project on January 27, significant progress
has been made on the development of a natural gas link between the
Caspian and Europe, and Georgia has an important role to play.

These developments indicate that the energy producing countries
of the region are determined to seek the diversification of export
options, but they need to be supported by the United States, and in
particular European, NATO, or Turkish security guarantees. After all,
Western Europe and Turkey are the major consumers and beneficiaries
of Caspian energy resources.

PAWN SHOPS REMAIN UNDECIDED

A1+
[07:59 pm] 03 March, 2009

A number of pawn shops in Yerevan refuse to take bonds due to the
sharp rise of the dollar.

"We don’t know what to do-raise the percent of the bond or not. There
is no sense in working now," told "A1+" a worker of the pawn shop
located on Mashtots Avenue.

Workers at another pawn shop on the same avenue explained that they
don’t have any drams and that they will solve the issue tomorrow. In
fact, many people are currently trying to hand their precious items
for getting prepaid money.

There are currently only one or two pawn shops taking bonds in Yerevan,
but their monthly interest rates have sharply increased.

"The monthly interest rate for bonds yesterday was 6 percent. Due to
the rise of the dollar we accept 15% interest rate. We still don’t
know how we are going to work and we need time to make a decision,"
told "A1+" head of the pawn shop.

The price of gold also went up by 1,900 drams today with 29 dollars
for one gram. People don’t even want to pay 15 dollars for gold in
the markets.

OSCE MINSK GROUP CO-CHAIRS LEAVE YEREVAN FOR BAKU

Noyan Tapan

M arch 3, 2009

YEREVAN, MARCH 3, NOYAN TAPAN. At the March 3 joint press conference
OSCE Minsk Group Co-chairs characterized all past meetings both
in Baku and in Stepanakert and Yerevan as rich and subject. The
mediators reported that straight after the press conference they are
again leaving for Baku where they are meeting with the President and
Foreign Minister of Azerbaijan. The terms of a possible forthcoming
meeting between Presidents of Armenia and Azerbaijan will be also
discussed in Baku.

"We express a hope that both countries’ Presidents will give a consent
to meet in the coming months. We are leaving for Baku with positive
feelings," Bernard Fassier stated. Meanwhile he did not render more
concrete the terms of the coming meeting. "We are going to present
the meeting dates to the Presidents and to give them a possibility
to choose a term convenient for them."

The problem of refugees took a special place at the press conference.

According to Matthew Bryza, the OSCE Minsk Group U.S. Co-chair,
the issue of return of refugees is a very important issue. It is of
very much significance as one of the conflict consequences: "Refugees
and displaced persons are a very important element in the process of
conflict settlement, and the issue of refugees’ return is touched upon
at any discussions of the Nagorno Karabakh problem. Irrespective of the
national belonging these people have rights, needs," M. Bryza stated.

As to meetings with Nagorno Karabakh community, M. Bryza mentioned
that the Co-chairs very attentively listened to the representatives
of Nagorno Karabakh NGOs and intelligentsia. "They are involved in
the process and we treat their opinion with respect," the American
diplomat stated. He emphasized that the approaches to the conflict
settlement should be acceptable for all sides and be based on the
three main principles of Helsinki act: non-use of force, territorial
integrity, self-determination right.

As to the possibility of involving Nagorno Karabakh in the negotiations
process, that is, the possibility of returning to the negotiations
format of 1997, Russian Co-chair Yuri Merzliakov said that the
negotiations process that started after 1997 and in which the Armenian
and Azeri Presidents were already involved, "receives more impulses
from these meetings than if Nagorno Karabakh again proposed its
position within the framework of MG when in general it hardly gave
anything." In his opinion, today the issue should be solved at another
level, that is, there should be Presidents’ consent on that problem.

PanARMENIAN.Net

OSCE MG Co-chairs arriving in Yerevan March 2
28.02.2009 13:02 GMT+04:00

/PanARMENIAN.Net/ The Co-chairs of the OSCE Minsk Group, Ambassador
Bernard Fassier of France, Ambassador Matthew Bryza of the U.S. and
Ambassador Yuri Merzlyakov of Russia will arrive in Yerevan on March
2.

As RA Foreign Ministry media relations division head Tigran Balayan
told PanARMENIAN.Net, the mediators will meet with Armenian President
Serzh Sargsyan and Foreign Minister Edward Nalbandian.

SHOIGU OFFERS TO CRIMINALIZE THE DENIAL OF USSR VICTORY IN WORLD WAR II

PanARMENIAN.Net
27.02.2009 18:24 GMT+04:00

/PanARMENIAN.Net/ Sergey Shoigu, Head of the Russian Ministry of
Emergency Situations, put forward a suggestion to pass a law that
would stipulate criminal responsibility for denial of the USSR’s
victory in the Great Patriotic War.

The minister stressed out that there was a number of countries on the
post-Soviet space that deny both the results of the Great Patriotic
War and the deeds of the Soviet nation in it. The law, the official
added, would allow to protect Russia’s history.

"The presidents of several countries, who deny that, would not be able
to come to our country unpunished, and the mayors of several towns
would think twice before they decide to dismantle the monuments to
Soviet warriors", he added.

Shoigu pointed out that he drew the idea from the experience of some
countries which had legalized criminal responsibility for denial of
the Holocaust.

GEOPROMINING GOLD COMPANY INCREASES ORE MINING VOLUMES

Arminfo
2009-02-27 08:54:00

ArmInfo. GeoProMining Gold Company increased the ore mining volumes
by 77% over 4 months of work in Armenia, Public Relations Department
of the Company group in Armenia told ArmInfo.

According to the source, 21 473 tons of ore were mined when the Company
started operation of the Sot gold field in November, 2008. The ore
mining volumes in December, 2008, made up 30 410 tons, in January,
2009, the mining volumes grew to 31 285 tons and in February –
to 38 000 tons. Ore transportation from the Sot field to Ararat
beneficiating plant also grew over the reporting period. 27 350 tons
were transported by railway in November, 30 571 tons – in December,
33 645 tons – in January and 38 000 tons in February. It is scheduled
to transport 40000 tons of ore in March.

To recall, GeoProMining started exploiting the Sot gold field in
early November, 2008. The works were launched in a difficult period
for the mining industry as it experienced difficulties in view of
the global economic crisis which has caused shutdown of the leading
world companies. As the Company management told earlier, GeoProMining
acquired the former Ararat Gold Recovery Company (AGRC), presently
renamed into GPMGOLD, for resumption of the work and preservation of
the workplaces.

TODAY’S ZAMAN: ARMENIAN DIASPORA PRESSING FOR GENOCIDE RECOGNITION

PanARMENIAN.Net
23.02.2009 15:06 GMT+04:00

/PanARMENIAN.Net/ Since U.S. President Barack Obama was elected
in November, analysts have cautioned, in reference to Ankara’s
expectations of the Obama administration, that the new White House
team would also have certain expectations from its transatlantic ally.

On Monday a White House statement announced that Obama had spoken
to both President Abdullah Gul and Prime Minister Recep Tayyip
Erdogan. The statement particularly noted that in both calls the
leaders discussed "the U.S. review on Afghanistan and Pakistan policy,"
as well as "U.S. support for the growing Turkish-Iraqi relationship"
and "the importance of cooperation in Middle East peace efforts."

In Ankara, during a press conference on Wednesday, Erdogan said that
he and Obama also discussed the Armenian Genocide issue.

While neither Erdogan nor Gul mentioned Afghanistan in their statements
regarding their talks with Obama, the U.S. didn’t mention the Armenian
Genocide in its own.

The wording of both sides’ statements has been read as declarations
of priority for each side in their bilateral relations.

Some observers in Ankara claim that the probability of a change in
Turkey’s strong determination to send combat troops to Afghanistan
could come on the agenda, given the fact that April 24, the day
the White House traditionally issues a statement on the Armenian
Remembrance Day, is approaching and the Armenian diaspora has already
started pressing American legislators to bring a Genocide resolution
to the U.S. Congress floor, Today’s Zaman reports.

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PRESS RELEASE

Monday, February 23, 2008

Armenian Translation of Levon Surmelian’s "Techniques of Fiction
Writing" Published in Yerevan

The Armenian translation of the late Levon-Zaven Surmelian’s "Techniques
of Fiction Writing: Measure and Madness" was launched at a special event
at the American University of Armenia’s Business Center on Tuesday,
February 17, 2009, which was organized by AGBU and the M. Abeghian
Institute of Literature of the RA National Academy of Sciences. This
book by the well-known Armenian-American writer, poet and educator is a
useful guide for young aspiring writers and literary critics. In
addition to "Techniques of Fiction Writing," which was first released in
English in 1968, Surmelian is best remembered today for his "I Ask You,
Ladies and Gentlemen" (1945), a best-selling memoir documenting his
escape from the Ottoman Empire during the Armenian Genocide.

Translated into Armenian by Aram Arsenian, "Techniques of Fiction
Writing" was funded by the AGBU Levon Zaven Surmelian Fund and published
by the Abeghian Institute of Literature as part of their "Literary
Studies XX century" series.

Deputy Director of AGBU Armenian Representation Hovig Eordekian was the
master of ceremonies for the event. He, in turn, invited AGBU Armenian
Representation Director Ashot Ghazarian to make opening remarks, which
dealt with an overview of AGBU’s publishing activities and focused on
the publication of works by Armenian writers who create in foreign
languages. Azat Yeghiazarian, literary critic and editor of the Armenian
translation of "Techniques of Fiction Writing," delivered a speech
emphasizing the importance of the "Literary Studies XX Century" series
as a valuable resource to writers and the public of Armenia. On this
occasion, singer Knarik Abrahamian performed songs by Komitas for the
audience in attendance.

Among those who spoke at the event were literary critic and director of
"Spyurk" scientific-educational center Suren Danielian, translator Aram
Arsenian, painter Hagop Hagopian and Surmelian’s nephew Sargis Sargsyan.
The latter proudly spoke about the book, which is still used as a
textbook in a number of U.S. universities, and also touched upon the
relationship between Surmelian and Vahan Tekeyan, which includes a
correspondence that is in the nephew’s private collection. A closing
speech was made by Levon Ananian, Chairman of the RA Writers’ Union, who
commended the quality of translation.

Established in 1906, AGBU () is the world’s largest
non-profit Armenian organization. Headquartered in New York City, AGBU
preserves and promotes the Armenian identity and heritage through
educational, cultural and humanitarian program, annually serving some
400,000 Armenians on six continents.

TREND , Azerbaijan
Feb 21 2009

President Ilham Aliyev and Dmitry Medvedyev discussed Nagorno Karabakh
Conflict over their phone conversation
21.02.09 20:03

On February 21 Dmitry Medvedyev, President of the Russian Federation,
made a phone call to the Azerbaijani President Ilham Aliyev. During
their conversations both presidents have been content of their mutual
cooperation in different fields. State based AzerTag news agency
reported.

The president chewed over the issues concerning upon the regulation of
the Nagorno Karabakh Conflict. The telephon conversation has included
also the global financial crisis.

The presidents expressed their hopes for further cooperation between
two countries. The presidents’ phone talks touched upon other issues.

PanARMENIAN.Net

Turks keep questioning themselves about Armenia’s further demands upon
Ankara’s recognition of Genocide
21.02.2009 16:30 GMT+04:00

/PanARMENIAN.Net/ For the last 1.5 years dramatic changes have
occurred in Armenian-Turkish relations, including the attempts at
improvement of relationships, which have never been made before, the
member of Armenian National Academy of Sciences, Director of Institute
of Philosophy, Sociology and Law Gevorg Poghosyan told a news
conference.

"In 2005 public opinion polls were conducted in Armenia and Turkey to
analyze relationships between Armenian and Turkish people. According
to poll results, there were few who believed any improvement was
possible", the sociologist said.

"According to poll results, Armenians have a clear perception of the
Turks. Turks’ perception of Armenia and Armenians is rather
indistinct. They maintain normal attitude towards their neighbor’s
being an Armenian, whereas Armenians assume a negative attitude toward
the possibility of their neighbor’s being a Turk," Gevorg Poghosyan
emphasized.

"This fact is accounted for Armenians having been the victims of the
Turkish government. Besides Armenians have no previous experience of
co-residing with Turks. The Armenian People have a psychological
complex concerning their relationships with the Turks. The complex is
deeply- rooted as it has been passed on from generation to
generation. Turks keep questioning themselves about Armenia’s further
demands upon Ankara’s recognition of the Genocide. This issue became a
pressing one," the sociologist said.

"A new public opinion poll is planned in September 2009. In his
opinion, the results of the new poll to be publicized in November 2009
will register significant differences as compared to 2005," he said.

"In 2005 around 20% of Turkish population knew or spoke about the
Armenian Genocide, and now their number grew dramatically. In the past
many people excluded the possibility of opening the border between
Armenia and Turkey and today the issue is being actively discussed,"
Gevorg Poghosyan said.