Analytical Articles

Recent political events have demonstrated the increasing tension in intra- and inter-state relations in the Caucasus, and have revealed the fragility of the current no-war-no-peace situation. The failure of Armenia and Azerbaijan to progress toward a settlement of the dispute, as was expected, has increased the risk of a renewed war. Instability has increased in Georgia too. In June and July, there was a growing demand by the opposition parties for a war to end the practical independence of the breakaway republics of Abkhazia and South Ossetia. Also, tensions have risen in two other regions. In July, the supporters of deceased President Zviad Gamsakhurdia demanded autonomy for their region, while ties between Ajaria and the Georgian central government worsened. Should the current fragile situation continue, there is an increasing danger that the entire Caucasus will be drowned into conflict and instability. Such a scenario would have dire political and economic consequences for the region and its neighbors.

A meaningful yet vague ending of the Musharraf-Vajpayee Agra Summit may have been caused by hard-line approaches, probably at some bureaucratic level. An opportunity to acclimatize the impact of post-Soviet geopolitical realities on South and Central Asian affairs appears postponed, if not lost. Being land-locked is not only hurting the economic and political development of central Asia but also equally hindering similar processes in both southern and western Asia. The geopolitical access of Pakistan to Central Asia had been among the major motivations behind both Vajpayee’s 1999 Lahore visit and the July summit. Domestic politics in both India and Pakistan and the prospects of new opportunities in Central Asia seem to be reshaping the perceptions of Indian and Pakistani leadership to normalize relations and resolve the Kashmir dispute.

The UNDCP has verified that the Taliban’s ban on growing opium is close to 100 per cent effective in the areas of Afghanistan it controls. While traffickers can draw on substantial stocks to continue the trade in the short run, sooner or later they will run out of "product" if the ban is sustained. This has serious implications for Tajikistan, which became a major transit route for Afghan opium and heroin in the late 1990’s. The profit for getting the opium and heroin across Tajikistan probably measures in the range of $100 to $300 million a year, which has come at the time of the implementation of a fragile peace accord. While a decline in trafficking is ultimately positive, the short term loss of this income will hurt the already struggling economy and could drive the traffickers into alternative money-raising schemes.

The increased pace of negotiations between Armenia ad Azerbaijan this spring led to great optimism, especially given the high level U.S. interest in the conflict. Increased U.S. cooperation with Moscow has been repeatedly praised. While this is a positive development, there is a risk of this cooperation becoming an end in itself while Russia is aggressively pursuing its interests in the region without any western reaction. The situation calls for a principled U.S. approach where the achievement of a lasting peace is seen as the main objective, rather than as a vehicle for ‘cooperation’ with Moscow.

On 31 July, Chechen and Russian civilians would have begun a peace march from Grozny to Moscow had its organizers not been prevented through unceasing FSB harassment. Nevertheless, calls for peace have been heard from many quarters: the refugees in Ingushetia who have signed petitions, formed active grass roots societies, and been on hunger strike for well over a month. Recent opinion polls show that less than a third of Russians support the war. Several Russian Duma deputies, some Russian generals, the democratic press, prominent pro-Russian Chechens, and Chechen President Aslan Maskhadov have all endorsed talks. Only President Putin, his immediate entourage, and other chekisty have consistently opposed such talks. They have used this war to instill fear in society and solidify authoritarian practices in Russia.

Doubts about the completion of the Blue Stream project have recently been fueled, first by the continuing crisis in Turkey's economy, including a corruption investigation into the contract itself; and second, by proponents of the long-stalled Trans-Caspian Gas Pipeline (TCGP) project for Turkmenistan's gas to be taken across the Caspian Sea floor and then into Turkey via an overland pipeline through Azerbaijan and Georgia. However, there is little reason to believe that Blue Stream will not come on line, even if this happens a little later than scheduled. More important, the project sets the stage for deeper industrial cooperation between Turkey and Russia in other sectors including defense production. A strategic entente between the two countries may arise over time on the basis of convergence over particular issues such as an already-existing tacit agreement not to discuss either Chechnya or the Kurds.

Only days before the Putin-Bush meeting in Ljubljana, an even more significant meeting took place in Shanghai between Putin and Chinese President Jiang Zemin, within the framework of the mechanism known until recently as the "Shanghai Five" or "Shanghai Forum". At the Shanghai meeting, Uzbekistan was welcomed as the institution's sixth full member. Documents were adopted bearing the titles, "Declaration of the Establishment of the 'Shanghai Cooperation Organization'" and the "Shanghai Covenant on the Suppression of Terrorism, Separatism and [Religious] Extremism". The name-change signals a move to establish a formal structure with a permanent secretariat in Shanghai, and to promote multilateral interministerial cooperation across a wide range of issue areas. It also signals, if one takes Beijing at its word, the incipient coalescence of a Sino-Russocentric geopolitical bloc in Asia. China's vision for such a bloc is to countervail any strategic vision that puts the United States at the forefront of twenty-first century global politics.

IMPLICATIONS: The changes in Gazprom leadership affect not only Russia, but also strongly affect the countries of the Commonwealth of Independent States (CIS). Gazprom’s policies determine the energy situation in many of these countries; Itera was selling gas bought from Gazprom mainly to CIS countries and many believed it was acting as an agent of the Russian state - allowing the Kremlin to manipulate former Soviet republics with gas supply terms and use them to pressure those with whom the Kremlin was dissatisfied. Gas supplies have often been interrupted to Ukraine, Georgia, and Azerbaijan for reasons that were obviously political. With Gazprom totally under state control, chances that it will continue using Itera as middleman in its deals with CIS states are low. Gas supplies to the CIS and to a number of eastern European states are likely to become even more politicized and dependent on these countries' compliance with Russian interests. This may weaken western-oriented states' attempts to drift away from Russian influence. On the other hand, it may work the other way as well - increased fears of energy crises could enhance incentives for faster development of Azerbaijan and Turkmenistan gas reserves and infrastructure for their transportation to the CIS market and beyond. The other implication for CIS countries may derive from Itera, which was obtaining major industries in CIS countries in exchange for debts these states were unable to repay. Itera was, once again, acting in the best interest of the Russian government – increasing the Kremlin’s economic leverage over these states. If Itera is no longer closely affiliated with the Kremlin, it will no longer need these industries in their current condition. Itera will face a choice: invest heavily and make them profitable, which is unlikely, or sell them. In this case Gazprom, or in other words, the Russian state, is a possible buyer. This would not impact the struggle for independence in CIS Countries positively.

Recent advances in the establishment of a transport network from Almaty to Karachi bypassing Afghanistan have reemphasized the need for a sea outlet for the landlocked Central Asian states, as well as the central role of Pakistan in their realization. When the political situation allows, routes through Afghanistan, including oil and gas pipelines, will complement this route and cut distances and therefore costs of transport from Central Asia to the Arabian sea. New trade opportunities are being opened up, from which regional and other states stand to gain.

Caspian energy resources will play an increasingly important role in the world energy supply over the next two decades. The United States, the world’s largest energy consumer, Europe, China and India will compete for those resources. This competition could bring Russia closer to the West.