Godfather of refused offers

For Global Voices Online: Is it a deliberate provocation, a government-engineered attack on a foreign head of state, a gas-giant's attempt to rock Russian foreign policy - or simply an example of good and critical journalism? Questions abound in the Russian-language blogosphere following Russian TV-channel NTV's 4 July screening of "The Godfather" - a documentary about Aleksandr Lukashenko, omnipotent president of neighbouring Belarus.

For long, Russia and Belarus have stood out as brothers in arms in the dysfunctional family of post-soviet states. Strings of harmony have even sounded a 1999 ouverture to formal unification of the two states. But as with any family, outward accord often hides domestic discord, and disturbances have been both frequent and harsh. However, up until now Moscow and Minsk have made efforts to keep up appearances. It is against this background that Sunday's screening of NTV's Lukashenko-critical documentary - beside overall sentiments of indignation - has sparked speculations that "The Godfather" of Belarus may have refused too many offers from the Russian Dons.

Then, what about the documentary in itself? As LJ user zmagarka notes [RUS], the Lukashenko documentary has little new to offer about government involvement in political repression, murders, and disappearances in Belarus over the last 16 years:

Thank you NTV for this documentary about the biggest Belarusian psychopath. For us, this was absolutely nothing new, not least because the greater part of the video was clippings from old films [---]. The theme of the "vanished" (disappeared political opponents) should never be forgotten and there is no forgiving the murderers, not even hoping so in their sweetest dreams. Still, over the last 10 years, matters have grown so much worse. About this there is hardly a word.

Gazprom

Returning to the major theme of discussion, it is no secret that relations between Moscow and Minsk have been tense in recent years, and it is likewise well-known that Russia's former President and now Premier, Vladimir Putin, has had to make little effort to restrain his enthusiasm, on both a political and personal level, in dealing with Aleksandr Lukashenko, President of Belarus. Consequently, many see the documentary as a political commission to NTV, although opinions differ on whether Russian state gas company, Gazprom, is behind it all or if sanction has come from the very top of Russian politics. That NTV is controlled by Gazprom, which until recently was engaged in a prolonged gas war with Belarus, may not be sufficient reason to simply point the finger at this company. As LJ user sergeland points out, also state owned Russia Today sounds critique towards Lukashenko:

At the same time, the multilingual international channel Russia Today ran a similar story about the last dictator of Europe. Formally, NTV is an independent TV-network, although it belongs to Gazprom, and Gazprom belongs to the state. However, Russia Today is a wholly state-owned company. Therefore, it is wrong to think that this action is merely a limited revenge against Lukashenko for the loss of the recent gas war. Without sanction from the very top, nothing would have happened.

Some Russian bloggers also believe that this is not simply a temporary squabble, but that the documentary marks a change in Russian dealings with Lukashenko, and even call for a straightout annexation of Belarus, arguing that Moscow anyway constantly has to pay Minsk's bill. Thus, LJ user elf_ociten, in a piece called "NTV tears the mask off the godfather" [RUS], writes:

At long last, the elite of the Russian Federation has made it clear that it is not heading down the same road as the bloody and thieving last dictator of Europe. It is time to disassociate ourselves from an independent Belarus and stop the farce of a union state, and thank God, Moscow has also put the question squarely to the Belarusian élite: Either Belarus becomes a North-Western territory (as an option) - without Lukashenko - as part of the Russian Federation, and with possible separation of ethnically Polish territories, or let's dump it together with Lukashenko and his free lunches to all four sides. As the saying goes, the cards have been called, and it's time to pay up.

However, such ideas are dismissed with ridicule in Minsk, and Belarusian bloggers are not late to underscore that also Russia is dependent on Belarus. As LJ user pan_andriy [RUS] is quick to point out:

On Belarusian forums, you can come across blunt suggestions to cut off transit of food to Russia. After all, Moscow sits with 90% imports of chow, of which a lot is rolled through Belarus. Within two days there would be full chaos in Moscow (remember the madhouse with salt because of rumours of a "war with Ukraine").

There are also voices in Belarus expecting its political leadership to pay back in kind, and according to LJ user Nagnibeda [RUS], there are even rumours that a documentary about Putin is in the making:

As a very initiated television source is saying, recruitment of staff has started for a film about Putin, in which the subject will be tougher than in the one reeled on NTV about Lukashenko. Putin will not merely be a murderer, but an outright serial killer of his own people.

Finally, as the saying goes: Why do you see the speck that is in your brothers eye, but do not notice the beam that is in your own eye? Consequently, LJ user varfolomeev_v draws some parallels [RUS] between politics in Belarus and Russia:

I wonder whether the executors of this political contract noticed that, telling about the horrors of political life in Belarus, they made a film about contemporary Russia? Only the names are different, but everything else - crackdowns, arrests, murders, and so on - wholly characterises also our own regime.

At the end of the day, and despite a recent customs union, it is becoming increasingly evident that Russia and Belarus do not head in bed again, and still they seem destined to more horsing about, not least if hiring media gunmen. Perhaps, both Slavic brothers should thus heed the advice of another godfather: "Never tell anybody outside the family what you're thinking again."

Time to rid the blinders about NordStream

The Swedish government's decision to accept the disputed gas pipeline NordStream has caused debate. Is the Russian-German gas pipeline a security policy threat to vital Swedish interests? Or is it a project that safeguards stability and development in Russia? In a recent interview by Andreas Henriksson from political web journal makthavare.se, I try to put some of these questions into perspective.

Vilhelm Konnander participated as one of the lecturers at the Fokus magazine conference "When technology changes politics" a few weeks ago, where he spoke at the Global outlook seminar. He is also one of the authors of the international blog gateway Global Voices, and has both professionally and privately followed developments in Russia for a long period of time. Makthavare.se asked him to give his views on the gas pipeline, and also account for the role that Russian gas and oil giant Gazprom plays in current Russia.

Q: How do you think that the Russian political leadership looks at the gas pipeline? Is it an important project for them from a strategic and geopolitical perspective, or is it a more downright economic project that carries its own merits and might have fallen had Swedish resistance been to great?

A: It is time to rid ourselves of blinders concerning the Nordstream issue. For Russia, NordStream and energy exports is a classical question of domestic foreign policy. It is about fattening a system that rests on a far-reaching political and economic symbiosis between competing political and economic élites, which seek to monopolize political and economic power. And the loyalty of élites is dependent on the incomes from oil, gas, and other raw materials, and how these profits are divided.

Extenstive regulations, taxation, and charges on the domestic market, has put the Russian energy industry in a position where the largest profits are made on foreign markets. For example, the internal Russian price on gas has, at times, been as low as a mere 3 percent of the export price. In the course of time, Gazprom's export incomes have varied between 50 and 70 percent of the business conglomerate's total revenues, despite the fact that substantially lower gas volumes have been delivered to Europe than to the domestic market. The Russian élites have thus enveloped itself into a so great dependency to divide the spoils of energy export revenues that it has become an integrated part of the country's informal system of government.

Q: And what would be the consequences of that?

Today, Russia's political stability is dependent on stable energy export revenues. In the event that this money flow is stopped - especially in times of economic crisis - it may subvert or threaten the political stability of the country.

The link between falling energy prices and Russian systemic collapse is obvious, regardless of whether one speaks of the fall of the Soviet Union or the financial crisis in the wake of which Putin came to power. Therefore, the effects of the international financial crisis is now all becoming resemblant of a fight for life or death to get hold of a piece of an ever diminishing cake. The consequences of Russian domestic political instability are still unclear, but increasing Russian desperation might cause greater uncertainties in the foreign and security policy area - in contrast to the clarity and predictability of recent years.

Q: What then might we expect from or great Eastern neighbour in the future?

A: In this perspectve, NordStream is, of course, important, but a basic mistake from the Swedish horizon is to constantly depart from very obscure geopolitical perspecitve, at the same time as the fundamental Russian domestic motives behind the project either are put in the background or regarded as purely economic.

In the interplay between politics and business, NordStream and similar projects are strategically vital for Russia, and here the domestic driving forces marginalise any potential foreign policy considerations - especially concerning a country like Sweden, which is hardly visible on the Russian political map. Continued Swedish resistance to NordStream would therefore be regarded as a ridiculous source of irritation from a Lilliputian country in the European periphery.

Q: In Sweden, NordStream has been thoroughly discussed, mostly from a critical perspective, by representatives of both the political blocs. Do you think that the NordStream management - and consequently the heavy political actors behind i in Russia and Germany - have paid any attention to Swedish critique, or would they have built the pipeline no matter what the Swedish government would have thought and said?

A: That Russia and Germany would have shown any greater consideration of Swedish critique is not very probable. Some considerations may well be made as for the stretch and makeup of the gas pipeline, and Sweden may surely also grumble and protract the issue if desired, but eventually both Moscow and Berlin counts on the Swedish government coming around. It is one thing if Sweden throws gravel into the Russian machinery, but to oppose both Russia and - above all - Germany will prove difficult in the long run.

Q: How important is NordStream, in your opinion, to Germany?

A: All since Willy Brandt's Ostpolitik was launched in the 1970s, Berlin and Moscow have enveloped into a mutual dependency according to the formula "change by rapproachment," where gas deliveries to Germany has become the basic ingredient in the political concepts of both continental powers.

Even if Angela Merkel's (the German Chancellor) enthusiasm towards the project is more controlled than her predecessor's , Gerhard Schröder, who by the way is on Gazprom's payroll, the realization of the gas pipeline is central to future German-Russian cooperation. That Germany, in current times of economic crisis, would terminate a project, which ensures long-term, secure, and cheap gas deliveries, would be very surprising - both from a political and a financial perspective.

Q: How politically directed is the Russian gas and oil giant Gazprom?

A: The question should perhaps rather be how economically directed the Kremlin is by Gazprom. That both Russia's president, Dmitry Medvedev, and on of the country's previous Prime Ministers, Victor Chernomyrdin, have been chairmen of Gazprom should be a clear indicator. Despite privatization attempts during the 1990s, Gazprom has remained a state gas monopoly with great influence on political power. With increasing political control over so called strategic resources, Gazprom has served as a tool for quasi nationalizations of remaining private gas and oil companies, why its position has been all the more strengthened. The question about Gazprom and the Kremlin is like tha classical question about the hen and the egg: Which one came first?

Q: To what extent would you say that Russia is using its great oil and gas resources as an instrument of foreign policy power?

A: Rhetorics about Russa as an energy superpower have, in recent years, almost become a mantra for Russian leaders, as a way of strengthening national self-images and confidence. However, judging from results, it is hard to show that Moscow is using energy as a direct foreign policy tool. Seen frlom an economic and domestic political viewpoint, the energy issue is, however, currently part and parcel of almost all Russia's conflicts with its neighbours in recent years - Estonia, Ukraine, Lithuania, and Georgia.

What is interesting is, however, to look at how Moscow indirectly uses energy as a means of strategic manipulation. With the help of energy, foreign policy advantages and concessions are simply achieved in other areas than exactly the one that each conflict focuses on. Energy is used indirectly rather than directly as a foreign policy tool, where domestic politico-economic considerations often determine foreign policy action.

Q: What do you think about the Swedish debate about NordStream? Is it substantially mostly correct or is it mared by antiquated Swedish fears of the Russians?

A: When Nordstream is addressed in Swedish debate, it is not hard to make up an image of a security policys establishment, where old realist political views are mutually confirmed and reinforced - no matter whether it is about security policy reservations or pretexts for the very same kind of perspectives. The interesting thing is not what is actually said, but what is not said.

Fundamentally, Sweden is faced by a catch 22 concerning the gas pipeline. Should one seek to undermine Russia's political stability by torpedoing the NordStream project, with increased Russian security policy unpredictability as a consequence, or should one indirectly contribute to support the continuation of a corrupt and authoritarian regime, of which one at least knows what to expect? That is a question that gets little or no attention.

Q: As you see it, is there something we in Sweden have misconstrued in the security policy and geopolitical judgement of NordStream?

A: We, basically, pose the wrong questions about NordStream, and consequently get all the wrong answers. As long as the Swedish political and security policy establishment is dedicated to self-binding about the question of our relations to Russia - regardless of whether it concerns NordStream or general approaches - we risk ending up with the wrong conclusions. As 20 years have passed since the fall of the Berlin wall, it is possible that we as little now as then might predict fundamental changes in Russia. Still, the invasion threat from the East returns in various forms. From military threat to criminality, from criminality to refugee invasion, from refugee invastion to epidemics, from epidemics to energy. The list is long, but what has become reality?

Translation published by permission of Andreas Henriksson, makthavare.se

The Caucasian Test Case

Today, the first more comprehensive analysis of the Russo-Georgian war in August 2008 was published, less than a month after hostilities ended. In its report Det kaukasiska lackmustestet (The Caucasian Test Case), the Swedish Defence Research Agency (FOI) summarises its findings.

The war between Georgia and Russia in August 2008 has fundamentally changed the playing field of international relations and the aftermath of the war will have profound consequences.

The purpose of this study is to analyze some central issues and implications of the war. The aim is to, shortly after the war and based on open sources material, draw some tentative conclusions regarding the consequences for the region and the world.

The primary conclusion is that Russia’s actions have triggered a far-reachingreassessment of the present world order. This will in turn lead to extensive policy changes at different levels as the actors adapt and try to influence the formation of the new world order. The war has laid bare the challenges and problems of the present international system. Responses to Russia’s actions will give an early
indication of the character and modus operandi of the coming world order.

My own contribution is a chapter on the information and cyberwar aspects (pp. 45-52).

Bibliographical information is as follows:

Det kaukasiska lackmustestet: Konsekvenser och lärdomar av det rysk-georgiska kriget i augusti 2008

[The Caucasian Test Case: Consequences and lessons Learned of the Russian-Georgian War in August 2008].

Robert L. Larsson (ed.), Alexander Atarodi, Eva Hagström Frisell, Jakob Hedenskog, Jerker Hellström, Jan Knoph, Vilhelm Konnander, Jan Leijonhielm, David Lindahl, Fredrik Lindvall, Johannes Malminen, Ingmar Oldberg, Fredrik Westerlund, Mike Winnerstig

The report in full [SWE] is available for download or purchase at the FOI website.

Referrals:

"Ryssen valde väg i Georgien. Fel väg!", Svenska Dagbladet, 15 September 2008.
"Analysts Call Russia-Georgia Conflict a 'Litmus Test'", Deutsche Welle, 16 September 2008.

"Ryssland ett växande hot mot sina grannar", Hufvudstadsbladet, 16 september 2008.

"Ny FOI-rapport speglar säkerhetspolitiska läget", Västerbottenskuriren, 17 september 2008.

"Säkerhetspolitiken i Europa är försämrad", Världen idag, 17 september 2008.

"Израилский след - Шведские военспецы выяснили, кто оказывал наибольшую военную помощь Грузии ", Новые Известия, 23 сентября 2008 г.

Gerontocrat Ghostbusters?

A spectre is haunting Eurasia - the spectre of Gerontocracy. All the Powers of new Europe are deserting a divided Union to shy away from this spectre: Bruxelles and Rome, Merkel and Blair, French anti-globalists and German Federalists.

The new Great Game over Central Asia between Russia and the West is becoming a struggle to either raise or exorcise the ghosts of gerontocratic systems. Russia's sphere of vital interests in the near abroad can only be preserved by control over infrastructure, and above all the flows of energy from the region. This is achieved by catering to the needs of a gerontocratic and corrupt system, originating from the soviet heritage, which Moscow has left the states of Central Asia with.

The West, to the contrary, has a vested interest in exploiting regional resources of oil and gas, and produce safe passages for receiving them. For long, the West was pragmatic in its approach to authoritarian regimes in the region, in order to reach the overarching goal of access to the coveted energy resources. Now, the realisation that it is impossible to work with corrupt and Machiavellian regimes is starting to dawn.

The summit between presidents of Russia, Kazakhstan and Turkmenistan in May was bad news for the European Union and the United States. Presidents Nazarbayev of Kazakhstan and Berdymukhammedov of Turkmenistan spoke in favour of closer energy relations with Russia, and against developing the westward trans-Caspian gas project. As previously reported, the trans-Caspian gas project is the key to long-term profits for the Western alternative of transferring gas from Central Asia - the Baku-Tbilisi-Ceyhan pipeline (BTC). Among BTC-investors are British Petroleum (BP) and American Chevron. Also, Royal Dutch Shell is about to lose its controlling stake in the Russian Far East Sakhalin-2 project, and BP is in trouble with its investment in the Siberian Kovykta gas field.

Western energy companies are certainly experiencing heavy setbacks in the FSU these days. As there is little to do as concerns Russia, the importance of Central Asian resources increase. Still, there is the question of the gerontocrat ghost - the inability to deal with the corrupt regimes of Central Asia. Then, what is companies such as BP and Shell going to do? Well, as the old movie tune goes:

If there's somethin' strange in your neighborhood
Who ya gonna call - ghostbusters!
If it's somethin' weird an it don't look good
Who ya gonna call - ghostbusters!

So, who might be such a ghostbuster? Who are the energy moguls going to call to exorcise the spectre - get rid of the ghosts of gerontocracy? A qualified guess might be a traveller in political revolutions, with experience of dealing with the old post-communist foe. Who then would be a better candidate than former US Ambassador Richard Miles? That ambassador Miles was posted to Serbia before the overthrow of Milosevic, and to Georgia during the Rose revolution is, by many, regarded as no coincidence. Some even claim that Miles figured in the outskirts of Ukraine's Orange revolution. After retirement in 2005, ambassador Miles worked as Executive Director of the Open World Leadership Center - headed by James "Icon & the Axe" Billington. Now, it seems, Richard Miles is a man without a mission. So, why not take pity on this old man and turn to him for advice - even give him a job? Miles might just be the ghostbuster who - with a little help from his friends - could get rid of some of Central Asia's gerontocrat ghosts. Who would be more fit to bring democracy and market economy to Central Asia and, in the process, safeguard western energy interests in the region?

Russia: Motives & Misperceptions

As relations between Russia and the West deteriorate, a growing tendency to misperceive Russian motives is discerned. Russia is not a monolithic power, but analysts increasingly tend to give prominence to factors that themselves cannot wholly explain Moscow's actions. A recent example is the Russian-Estonian crisis.

The current crisis between Moscow and Tallinn has its specific origins, and should come as no surprise to most observers. The basic preconditions for crisis were set already in the early 1990s, and both parties are since stuck in a mutually detrimental relationship. The difference this time though is that there currently are no countervailing forces in Moscow to keep the conflict in check, as has previously been the case. This is matched by poor judgement on the Estonian side. Also, the conclusion by western analysts that Russia is using its energy weapon against Estonia by imposing an export blockade seems flawed and an example of mental bandwagoning among people prone to single factor explanations.

Public opinion in Russia about the Baltic states was forged from the disappointment of their determination to abandon the ailing Soviet empire. The Balts were considered part of the liberal and reform oriented forces in soviet society, why Russians felt betrayed by the Balts as Moscow perceivably strived towards the same political goals as the Balts were identified with. The realisation that the Baltics now were abroad took a long time for most Russians to come to terms with. That Russians had become subjects of a non-Slavic state in which they had to seek citizenship to enjoy the full rights of society was incomprehensible. That states like Kazakhstan might treat Russians badly was only to be expected, as they did not share the liberal heritage Russians associated with the Balts. A measure of double standards was thus introduced in comparing the situation of Russians in former soviet republics. As for the Baltics, Russians felt scorned in their identity as imperial civilisation carriers. An inferiority complex was thus the nucleus of the dispute over the situation of Russian "minorities" in the Baltic states.

As things have evolved in Russian-Estonian relations over the last month, the image conjured up by Russian media is that of Russians being wronged and bereft of their rights and heritage. The difference this time is that there are no countervailing forces in Moscow to keep too overt nationalist sentiments in check. Still, most analysts limit themselves to describe the conflict in either bilateral or Estonian terms, whereas Russian domestic factors are left out. This limits reporting to developments of the same Russian-Estonian themes covered over the last 15 years, and old articles might be taken out of the drawer to be rewritten or updated, simply filling in the new facts. In essence, however, they lack the proper contextualisation to explain why the conflict has taken a new turn for the worse. Action is not enough - as the removal of the Bronze Soldier and its consequences. Context must be added to analysis in order for us to understand the full extent of the problem.

Next year, Russia faces presidential elections. By all appearances it seems to be a runoff between Sergei Ivanov and Dmitri Medvedev. The power struggle in the Kremlin is however already underway, and who eventually will get the upper hand sways back and forth between the two main contenders. Half a year ago, Medvedev was in the lead, but now Ivanov has made a comeback and seems to be in the best position to become master of the Kremlin in 2008. In this context, Ivanov has used the Estonian crisis to gather his forces in front of a common foe. Opinions on Estonia are by now so deeply set that they may be used as a vehicle to gather the Russian masses. Previously, Russian leaders have known where to draw the line in using the "Baltic question" but now president Putin cannot put the foot down as too great interests are at stake, in who will rule Russian politics in coming years, to risk anything just to preserve a working relationship with Tallinn. As for relations with the European Union and Nato, Putin walks a thin line in risking a multilateralisation of the Estonian issue.

However, Medvedev is also not left out in gaining the dividends of the Estonian crisis. Last week, Sergei Ivanov, during a meeting with governors in Murmansk, declared that the Russian oil and coal previously exported by transit through Estonia will now instead go through the port of St. Petersburg. Russia annually ships around 25 million tonnes of fuel oil, gas oil and petrol through Estonian ports. Imposing a Russian energy blockade on Estonia is regarded by many analysts as a way for Moscow to use its energy weapon. Such a conclusion, however, seems flawed as Estonia is relatively spared of any major consequences for its energy supply. Instead, it may prove a way for major Russian oil exporters - mainly Rosneft - to curve export competition by other Russian oil companies.

Transferring exports to St. Petersburg will indirectly give Rosneft greater control over who will be able to export Russian oil. St. Petersburg port is already today gravely undersized - not to mention corrupt - and much effort has been made in recent years to construct new harbours in the Gulf of Finland - Primorsk for oil and Ust Luga for bulk. Opting for Petersburg therefore means that companies that previously have exported by way of Estonia now are at the mercy of Rosneft to meet their deliveries to western customers. In essence, the energy blockade against Estonia gives Medvedev's interests a way to hit at remaining independent competitors within the oil industry. Consequently, Ivanov reaps the political and Medvedev the economic rewards of the Estonian crisis.

So, should all explanations based on the actual situation in Estonia and relations with Russia be discarded? Of course not. However, it is equally important to analyse the conflict on its own merits as it is to contextualise it, striking a balance on the domestic-foreign frontier. An obvious example is the risk that the conflict may spread also to Latvia. Most observers would say that situations differ too much for something similar to happen in Riga, but still Latvian authorities are apprehensive. From both a political and economic perspective, Ivanov and Medvedev may gain from sparking a crisis also with Latvia for the very same reasons why they have let the crisis with Estonia get so much out of hand. There simply is too much to gain and too little to lose domestically at the moment, that a Russian-Latvian crisis should not be ruled out just because situations in Estonia and Latvia are not similar enough. Giving the crisis a Russian domestic political contextualisation shows this.

Still, is the Kremlin willing to risk its relations with the West - EU, Nato and the US - over such an insignificant issue as the Baltic question? Actually, such an assumption should not be ruled out. Already, Moscow is at loggerheads with Washington, and the US understands that it now has to be tough on Russia in order to have a working relationship. The European Union, however, takes a much weaker stand when it comes to Russia, and when it does confront Moscow it is on negotiation issues such as the Partnership and Cooperation Agreement (PCA) and the European Energy Charter. Until now, Russia has never had anything to lose in real terms in relations with the EU, and the Union consistently avoids putting its foot down in relations with Moscow. That Poland and other member states, in this context, may hamper EU-Russia negotiations is officially treated with resignation in Bruxelles, while most unofficially sigh with relief. Thus, Russia rationally calculates that the EU will never truly make a stand in their relations, why Moscow really risks nothing by a confrontational policy.

Developments in Russia are met with growing concern in Europe, and there is an understanding that sooner or later the European Union will have to confront the issue, as many of its members are already experiencing the realities of a more assertive Russia on the world stage. Doing so, however, sets out from, on the one hand, foreign relations and, on the other hand, Russia's domestic political situation. The latter is mainly directed at the crisis for democracy and human rights and far too seldom at the factors that Russian rulers themselves would deem of political importance. Foreign and domestic factors are increasingly treated as monolithic and attempts at joint analysis are often superficial or aim at the wrong factors.

The result is that it is becoming all the more of a mystery in the West why Russia acts as it does. The West is once again allowing Russia to become "a riddle wrapped in a mystery inside an enigma" for the evident reason that Europeans are too subsumed by their own values, norms, perceptions, and prejudice to follow the simple logics of current Russian politics and society. Then it is much easier to produce an image of a state that once more might pose a threat to Europe - an alien entity accepted by its mere existence but doomed to remain foreign to Europe. Here, the Russian-Estonian crisis serves as a striking example of how the West fails to account for important factors in its perceptions of Russia. As European public opinion turns increasingly against Russia, the risk of misperceptions may become an even greater danger than a revived Russian threat in the eyes of Europe. Russian motives are not always what they seem.

Russia's Nationalisation Trap

Which are the common assets of a nation and who should be allowed to utilise them? This is a question of heated debate for current Russia, as the vital energy sector is gradually being nationalised. It is privatisation in reverse - for everyone to see - no matter what the Kremlin might claim. The question is: Is it good for Russia?

In terms of economics, monopolisation - in this case nationalisation - may be motivated if the sector in question constitutes a natural monopoly. This may mean one out of two things: Either the social costs of monopoly production are lower than under competitive circumstances, or if the fixed costs of entry into a sector are so high as to be predatory, it allows but one viable and effective producer. Areas associated with natural monopolies are e.g. water services, postal services, telecommunications, and so on. However, as examples in global economy show, natural monopolies are not a sine qua non. Private companies may offer such production and services, as are associated with natural monopolies, more efficiently and at a lower price, than a state monopolist may. This is not always the case, and monopoly may in some instances be preferrable to competition. However, one should not automatically rule out competition only on the basis of existing economies of scale appearing to naturally favour a monopoly situation.

So, in view of current nationalisation of the Russian energy sector, could it be argued that it constitutes a natural monopoly? Most probably not. Instead nationalisation may threaten the industry as a whole.

What an industry such as the energy sector needs is long-term engagement and development. It needs large-scale investments over a long period of time in construction and maintenance. It also needs technical skills and know-how along the entire scale from prospecting to sales. Finally, it needs means of development - the capacity to expand and extract new resources and deliver them to costumers under efficient and competitive circumstances. These are qualities that a state actor does not necessarily posses.

So, does the Russian state have the financial resources and the commitment to maintain and develop the energy sector? For obvious reasons, it is a question still to be determined. However, judging from the current situation and the way the Russian state acts, perspectives are bleak for efficient state-owned energy production in Russia. First, Russian state-owned energy companies do not fit the profile depicted above. The situation clearly needs the dynamics only attainable under competive conditions. Secondly, Russian state interests tend to come in conflict with the rational needs of the energy sector.

The 2003 Yukos scandal and its aftermath clearly indicates a conflict of interests between the state and private enterprise in the energy sector. It is often argued that Yukos founder, Mikhail Khodorkovsky, had become too mighty and did not know his place, by meddling into politics. He was considered a political threat to power. However, reviewing the case from an economic perspective is even more disastrous. What really was at stake, were the large investments into energy infrastructure that Yukos planned to make - the various pipelines the company wanted to build. If these plans had been realised, they would have made Khodorkovsky more or less politically independent from Russian state leverage. Still, economically, such investments would potentially have brought profits and prosperity to Russia's economy and, indirectly, to its people. Furthermore, they were exactly the kind of investments that were economically sound and would have developed the energy sector in a positive direction. Thus, by victimising Yukos for political reasons, Russia was rendered an economic loss that the state was unable to compensate for. Consequently, as Khodorkovsky's 2005 nine-year jail sentence serves to show, the interests of the state and private business are far from always compatible.

Since then, the tendency arising from the Yukos scandal has strengthened. Private companies in the energy sector meet with state or pseudo-state opposition. Deals once made are put into question. Pressure is brought to bear on outside actors, such as when Gazprom recently seized control over the Sakhalin offshore project, ousting a foreign consortium led by Shell. Environmental motives are given for action against foreign investors, whereas Russian companies would never meet with such demands. Also, as the Yukos case shows, expropriation has become a new method for the state to forward its own and associate interests.

The perspective becomes even more horrendous when reviewing the issue from a security point of view. In Putin's opinion, it seems that not having full control over Russia's energy resources would pose a threat to the country. Accordingly, Russia cannot depend on private, and often foreign, companies for its energy production. Furthermore, the country cannot depend on transit of oil and gas by pipelines running through foreign states. Consequently, new state-controlled pipelines are built bypassing intermediate countries, such as the Nordstream pipeline projected to run through the Baltic Sea. From an economic point of view, it is highly questionable whether this and similar pipeline projects are financially viable, especially as the costs for developing and expanding already existing pipelines over foreign territory would be much lower, as would even be the case of building new ones. Therefore, it is obvious that Putin's obsession with control is detrimental to almost any economic rationale.

So, who stands to gain from nationalisation of the Russian energy sector? Who is allowed to utilise the common assets and to what end? The obvious answer would, of course, be the Russian state. However, with lacking long-term commitment to maintenance and development, the overall GDP stands to lose from state ownership. The state will be forced to either carry the burden of investments or see energy incomes dwindle due to neglect and inefficiency. Consequential interruptions of delivery to costumers would not vouch for Russia's role as a reliable producer. So, why should Russia voluntarily assume these great costs, when private companies could freely do it with greater professionalism than the state would ever be able to do?

The other obvious answer would be that the Russian people would gain from nationalisation. However, to what extent are the energy incomes redistributed to the people, and if so, would it be in the true interest of the people? First, the Russians receive little of the energy profits. It is true, there have been some attempts at state social reform and economic support lately, but it is questionable whether this is motivated out of real concern for the people. An example is Russia's population decline, where Putin seems more worried about the decrease in the future number of conscripts for the military and similar issues, than the social malaise of the people itself. Also, if too great a proportion of the incomes would actually be distributed to the people, it might cause economic crisis due to consequential hyperinflation. Finally, a state-run energy sector would probably be less efficient than a private alternative, creating comparatively lower profits. The effect would be an overall lower GDP, negatively affecting the Russian people. Thus, it seems that the Russians have little to gain from nationalisation of the energy sector.

Then, does nationalisation of the state sector strenghten Russia in its foreign relations? Initially, it might seem that control of the energy - as a strategic resource - would strengthen Russia's international power. The threat of "turning the tap" would seem to be a constant leverage for Moscow towards foreign states, mainly the EU, dependent upon Russian energy. However, this is countered by an equal risk that foreign states would turn to other producers or seek alternative energy solutions, such as e.g. nuclear power. Still, as the example of the European Union shows, Russia is more dependent on the EU than the EU is of Russia. Also, the EU is becoming increasingly weary of Russian ambitions and the country's reliability as an energy deliverer. Moscow has declined to ratify the European Energy Charter Treaty. European initiatives to develop the energy contents in a renewed Partnership and Cooperation Agreement (PCA) have met with outright opposition from Russia. Thus, Moscow is sending an increasingly clear message to Bruxelles about its intentions: Russia is not to be trusted as a reliable partner to the European Union. Regretfully, these are exactly the sentiments beginning to grow in Bruxelles and European capitals.

Today, it is obvious that Putinist ideology is the foundation of the current nationalisation of the Russian energy sector. It is the sort of étatism that belongs to the 19th century. It is a statist view that emphasizes control over rationality. It is an antiquated geopolitical outlook that puts the map before the realities of modern society. It is a perspective where the power of a state is measured by the quantity of its population, not of its output. It is a perspective that sees foreign relations as a zero-sum game. That president Putin wants the state to assume control of Russia's energy resources is but another factor in this overall scheme. For him, that the state owns a country's resources is only the natural state of things - how it should be. Reviewing this perspective, the conclusion is apparent: Putinist ideology simply is a notion that lacks understanding of the modern world.

Still, what the modern world is about is cooperation to the common good of those who participate in it. Thus, what Putinist ideology disregards is a fact so obvious that it needs neither stating nor reiterating: Modern power derives from the relative gains of cooperation - not from conflict or absolute capabilities. Making it alone is simply not an option in the modern world, and still this is the absolutist approach that Putinist Russia is opting for. That it is no viable long-term option for any state, seems of no concern to the country's leadership. Sooner or later, Putin's path will, regretfully, come back with a vengeance to Russia and its people.

In the meantime, the common assets of Russia are utilised to the detriment of the country and its people. Nationalisation is not good for Russia, and thus the Russian people may gradually come to understand that Putinism is simply not good enough for them. Until then, Russia is caught in a nationalisation trap.

Getting too hot?

"Russia is a northern country and if temperatures get warmer by two or three degrees Celsius it's not that bad - we could spend less on warm coats and agricultural experts say that grain harvests would increase further." Thus, Russian president Vladimir Putin jokingly put it in 2003, opening a major international conference on climate change in Moscow. For long, Russia was hesitant to signing the Kyoto protocol on global climate change, before Moscow eventually subdued to international pressure in 2004.

Let's face it: Environmentalism is simply not something one would expect from Putin and his crowd of siloviki and oil barons. As Russia signed the Kyoto protocol in November 2004, it was against the strong advice of both the Ministry for Industry and Energy and the Russian Academy of Sciences. In exchange, Moscow received EU support for Russia's admission to the WTO, why the Kremlin probably considered the deal a fair trade. Warm feelings for preventing the greenhouse effect had little to do with Putin's position on Kyoto.

Russia's traditionally energy intensive industries would normally vouch for a negative stance on limiting the country's greenhouse gas emissions. However, this has posed no great problem for Russia, as the Kyoto protocol is calculated on the 1990 emission levels. Given the economic and industrial collapse of the early 1990s, Russia still has a long way to go before reaching such levels again. Instead, it has been argued that the country might actually benefit from the Kyoto protocol by selling emissions credits to other countries. With the current economic boom in Russia, though, the deal is increasingly questioned for concerns that it might hamper industrial growth. Not surprisingly, the mighty energy sector is one of the greatest critics of the Kyoto protocol. However, this might paradoxically become the opposite in a few years' time.

Yesterday, Russian gas monopoly Gazprom declared that its export of natural gas to Europe had decreased by 16%, as compared to the same period last year. The reason for Gazprom's drop in output was evidently warmer weather in Europe, leading to decreased consumer demand. Also, exports to the FSU dropped by 15%, and the supply to Russian consumers by 11% during the same period.

While it is still too early to say whether this winter's mild weather is due to global warming, it is quite clear that if this tendency would become permanent in years to come, it would have a grossly negative impact on international gas demand and prizes. One obvious loser of such a development would be Russia's energy sector, which constitutes the engine for the country's economic growth. Thus, if global heating would put a check on energy prizes, Russia's energy-dependent economy is a candidate for severe crisis.

So, should we expect Gazprom executives to turn into ardent environmentalists? Will Ivanov and Medvedev campaign to stop global warming for next year's presidential elections? Most probably not! Still, one never knows. When it comes to realities, Russian politicians are usually swift to change opinions if money is at stake. If plunging energy prizes would hit Russian pockets, we might witness an eventual shift in Kremlin views on global warming. As we have still to see the true consequences of the greenhouse effect, it remains uncertain how fast an impact it will have on global temperature levels. The forms of and extent to which global warming will affect Russia is thus for the future to decide.

Armenia Railroaded on Train Line

Last Thursday, an agreement was signed between Turkey, Georgia and Azerbaijan on the contruction of the Kars-Tbilisi-Baku railroad, further barring Armenia from infrastructural cooperation in the western Caucasus. Effectively, Armenia is increasingly isolated from regional developments of great consequence for the country's future. As a consequence, Armenia may be further driven into the arms of Russia, strengthening the delineation of spheres of interest in the Caucasus between Russia and the West.

The agreement, signed in Baku, by Turkish Prime Minister Erdoğan, Azerbaijani president Aliyev and Georgian President Saakashvili, bypasses Armenia by opting for the Kars-Akhalkalaki-Tblisi-Baku stretch, instead of the previously designated, and already existent, Kars-Gyumri rail line, going through Armenia. The Armenian-Turkish border, and along with it the Kars-Gyumri railway, has been closed since 1993, due to the 1988-1994 Armenian-Azerbaijani war over Nagorno-Karabağ. Thus, the Kars-Gyumri alternative would have meant reopening the border - a matter too difficult for Turkey to deal with in view of the sensitive Armenian question and upcoming parliamentary elections. As the opposite now is the case, Thursday's Baku agreement, by excluding Armenia, only serves to prolong a stifling status quo in relations between Yerevan and Ankara, and furthermore risks regionally isolating Armenia to the benefit of Russia.

The idea of the railway project, popularly known as the Iron Silk Road, originates from the 1960s, when the first plans to form, what is now known as, the Trans-Asia Railway Network (TAR) were raised. From the original plan of uniting 14.000 kms railroad from Singapore to Turkey, the scheme has grown to fathom some 81.000 kms, spanning all over the Eurasian continent. Thus, in November last year an agreement was signed to this end, under the aegis of the UN Economic and Social Commission for Asia and the Pacific (UNESCAP), as reported by RFE/RL-Online.

On the regional level, the question has been how to unite the various railway systems, linking the countries in the Caucasus with Turkey, as part of the larger Iron Silk Road project. Thus, a corresponding agreement was reached, by the Parliamentary Assembly of the Black Sea Economic Cooperation (PABSEC), as early as in 2005. It stipulated that the Kars-Gyumri-Tbilisi-Baku railway should be considered the only viable option for uniting the regional railway network, while it would connect all countries in the region, not need any substantial investments, and avoid any potential dividing lines. However, keeping to these and similar committments has proven very difficult.

On a strategic level, the Kars-Tbilisi-Baku agreement further underlines how the delineation of spheres of interest in the Caucasus between Russia and the West is exacerbated. Leaving Armenia out of the dynamics of regional development in this way, poses the question of how far-reaching a tacit understanding there is, that "Armenia belongs to Moscow." Another factor for leaving Yerevan at the side of the road, might be that western interests want to avoid being exposed to the risks of relying on infrastructure that, in event of crisis, may be controlled by Russia. A 5,000 man strong Russian troop contingent is currently posted on Armenian territory.

The agreement also shows how both Russia and the West attach an increasing importance to control over strategic infrastructure. It is no secret that the West's most important regional infrastructure project in Eurasia, namely the Baku-Tbilisi-Ceyhan pipeline (BTC), runs through Azerbaijan, Georgia, and Turkey, partly due to the ambition of strategic control. That Moscow has been negative to reopening the Kars-Gyumri railway, between Armenia and Turkey, serves as no surprise in this context.

As for Armenia's international position, Yerevan would like to regard itself as a "Finland of the Caucasus" in terms of dealing with Moscow. During the Cold War, the Finns succesfully defended their national sovereignty by a well-balanced policy towards Moscow, safeguarding their country against recurrent Soviet plans to bring Finland in under the umbrella of the Warzaw pact. The fears in the West of so called "finlandisation" thus in the end turned out to be exaggerated, although Helsinki at times was weighed down under the pressure of Moscow's interests.

While Finland could benefit from the Cold War balance-of-power system in Europe, as a counterweight to the Soviet Union, Armenia since the 1990s has had greater difficulty to gain a corresponding means of balance. A double-edged instrument has been to use the Armenian diaspora in the West, which could equally complicate as facilitate regional relations. In the context of the Kars-Gyumri railway, Armenia has used its Westen lobby-groups to bar the Kars-Tbilisi-Baku stretch favoured by Turkey. Thus, US Armenian groups last year succeeded in blocking American funding of the Kars-Tbilisi-Baku railway by securing a decision of the US Congress. By Thursday's Baku agreement, such measures now seem to no avail, as construction of the new railway stretch - bypassing Armenia - now are to be realised. However, the final word has perhaps not been said yet, judging from how positions on the issue have slided back and forth in recent years.

On a national level, the Baku decision comes at a most inconvenient time, as Armenia is up for parliamentary elections on 12 May this year. Overshadowed by the Orange and Rose revolutions in Ukraine and Georgia, Armenia is undergoing somewhat of a political refolution, as Ralf Dahrendorf so succinctly termed events in Central and Eastern Europe by the end of the Cold War. It remains to be seen whether Armenia will be able to carry through its process of change under the weight of various domestic and international pressures.

Regretfully, Thursday's railway agreement puts Yerevan at the crossroads between Russian influence and continued regional integration. It is thus fair to say that Armenia has been railroaded in making its independent and sovereign choice on its future forms of regional and international cooperation.

Turkmens Thrash Turkmenbash?

As Turkmenistan is facing presidential elections on 11 February, it is becoming increasingly clear that the late Nyýazow's successors have begun to turn their backs on Saparmurat Türkmenbaşy's political legacy, in brokering the terms of Aşgabat's new oligarchy.

Abandoning Nyýazow's unique Turkmen third way alternative to the values of modern civilization, seems the preferred choice of the new regime in the making. A recent secret poll, by the Eurasian Transition Group, shows that 81% of Turkmens support democratic reform, while 55% doubt that the upcoming elections will be free and fair. Even though these figures are far from reliable, they indicate popular fatigue with the current situation and a wish for change. The political realization of this has led political leaders to at least simulate a free and democratic process for the upcoming elections.

That Türkmenbaşy's political legacy is in question is furthermore signalled by declarations to restore the education system dismantled by Nyýazow, return to fully fledged pensions, grant free access to the Internet, and even restore railway traffic with Russia. All the same, the intentions of Turkmenistan's new leadership are far from clear. Thus, it seems that repression has been stepped up since the December 21 death of Nyýazow, and Reporters Without Borders singles out Turkmenistan as one of the most repressive countries in the world, in its 2007 annual press freedom survey. Despite reformatory indications, it thus stands beyond doubt that the main goal of current power in Aşgabat is to safeguard stability and a peaceful transition of leadership.

In an excellent article in Sunday's Washington Post, Peter Finn presents an overview of the situation for the upcoming elections. Whereas Turkmenistan for the first time allows more than one person to run for office, it is more than obvious that acting president Gurbanguly Berdimuhammedow will be declared winner on Sunday. Thus, the remaining five presidential candidates stand under constant supervision of the national security service, MNB, and their public appearances are directed by the political principles outlined by the leading candidate, Berdimuhammedow. Indeed, all measures since Nyýazow's death have been directed towards bringing Berdimuhammedow into power, including constitutional violations and changes.

As for power, it however seems that Berdimuhammedow is rather a frontman of an evolving political oligarchy, centred around the national security council, than a strong political figure in himself. Allegiance to the legacy of Nyýazow - interpreted however the new rulers see fit - here appears to become both a formula for legitimacy and a tool to suppress whatever opposition might arise. Consequently, it seems that Turkmenistan is poised for a transition to oligarchic dictatorship rather than any real or even gradual reform process.

As for international reactions to the new situation they may be characterised by a combination of relief over Nyýazow's death with hopes to exploit any chances of closer cooperation with Aşgabat, not least within the energy sector. Thus, both the US and the EU are stepping up their contacts with Turkmenistan. However, it is Russian president Putin that, by all appearances, stands as victor in the struggle over relations with Aşgabat. Putin was the first to single out Berdimuhammedov for support and thereby Moscow seems to be succesful in safeguarding Russian interests - primarily the 25 year gas accord with Turkmenistan, signed in 2003. By supporting Berdimuhammedow, Putin seeks a successor who will honour the committments so crucial for Russian interests in and influence over the region. However, also China lurks about in the scenery, trying to secure a recent deal to build a gas pipeline to meet the country's increasing energy demand.

To sum up, it is in the interests of both domestic and international actors to maintain stability in Turkmenistan, almost whatever it takes. It is likely that internal interests of the current regime will be strong enough to exercise oligarchic dictatorship with the silent consent of the international community. If worst comes to worst, Nyýazow can always be used as a common scapegoat for the country's lack of progress. Such acts of "turkmenbashing" however seem distant in today's Turkmenistan.

Kazakh Crimes or Borat's Chimes?

As Kazakhstan's president Nursultan Nazarbayev visited Washington last week, his meetings with top US officials - including president Bush - was overshadowed by the launch of British comedian Sacha Baron Cohen's upcoming movie: "Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan."

The British comedian - depicting the fictional Kazakh journalist Borat - has long been a nail in the eye for Kazakhstan's efforts to create a positive international image for the country. Cohen's character instead produces an image of a backward country on the verge of civilisation run by a comic dictator. Over the past years, Kazakh authorities have gone to great lengths to counter the "Borat image" of the country, and its foreign minister has even threatened to sue Cohen in Britain for smearing Kazakhstan. Also, Borat's official website in Kazakhstan has been closed down by authorities, provoking widespread protests internationally, from among others Reporters Without Borders. The issue has grown to such proportions that Kazakhstan chose to publish a four page ad in both The New York Times and Washington Post for Nazarbayev's visit in the US. The only problem was that the ads only served to emphasise the comic image of Kazakhstan by attributing the country's successes to Nazarbayev himself.

Still, the question is if Borat's image of Kazakhstan is the one that an initiated Western audience would like to get across to the general public. It would seem that greater issues are at stake such as human rights and democracy. Several critical voices were raised before Nazarbayev's visit to the US, but they were later largely overshadowed by on the one hand the message the Bush administration wanted to send and on the other by Sascha "Borat" Cohen's media coup. Critical issues were thus largely left out.

One leading analyst, S. Frederick Starr of Johns Hopkins, though succeded in getting access to the media by a column in the Washington Post. The only problem was that Starr joined the crowd of those paying tribute to Kazakhstan's progress in recent years, thus furhter defusing a potentially embarassing situation for the White House wanting to avoid questions on the human rights and democracy situation. It is true that Starr was right in pointing to improvements on many levels, in contrast to a generally dark depiction in the West of post-soviet republics. However, this does not warrant leaving the difficult issues out. Also, Starr's article in the post stands in contrast to the negative story the Post published but little over a month ago.

Kazakhstan is, essentially, a country run as a corrupt company by one family, namely that of president Nazarbayev himself. In June, Nazarbayev's son-in-law became chief of the country's gas and oil company, whereas the presidential daughter is a key stake-holder in one of Kazakstan's largest banks. Another daughter is party leader and MP, with a husband serving as deputy foreign minister. It is in this autocratic climate that little room is left for democracy and human rights, and magnanimous ideas - such as turning the flow of Siberian rivers - are increasingly coming into vogue. This is perhaps no wonder as Nursultan Nazarbayev received 91% of votes in the rigged December 2005 presidential elections.

Human Rights Watch has repeatedly criticised Kazakhstan for severe human rights violations, lack of democracy and persecution of political opposition groups and independent media. Furthermore, authorities keep a close check on all NGOs and registration is mandatory. The freedom of organisation is thus legally circumscribed. Moreover, Kazakshtan was rated one of the most corrupt countries in the world by Transparency International in its 2004 report. It is with such a country that the US has so cordial relations.

Then, what is the White House position on these issues? Meeting Nazarbayev last Friday, president Bush praised Kazakhstan for its "commitment to institutions that will enable liberty to flourish." Also, during his visit to Astana in May, vice-president Dick Cheney declared the country a "key strategic partner of the United States” in its war on terror. Besides the war on terror, oil is the main reason for the Bush administration's cordial relations with Kazakhstan. The Baku-Tbilisi-Ceyhan pipeline (BTC) is a key strategic asset for the West in the future access to oil from Central Asia and the Caucasus, and the BTC is dependent on the inflow of Kazakh oil for long-term profitability.

Therefore, a new Great Game between Russia and the West over the energy resources of Central Asia is played by mighty international commercial interests, in which US companies have a high stake. Earlier this year, Russia won a small victory in this new Great Game over Central Asian resources by being promised increased oil exports by Nazarbayev. This poses a threat to the BTC pipeline, as the very same oil that was intended to flow westwards now instead may go to Russia. With increasingly scarce international oil reserves in the future, now is the time of determination of who will control what resources are left. Here, Kazakhstan plays a key role in Central Asia in view of political stability combined with relative accessability to resources. Consequently, it is very important for the Bush administration to get relations between the US and Kazakhstan back on track.

Then, does Kazakhstan matter? Is it not yet another far away country of which we know nothing? For now, the paradox remains that Kazakhstan matters greatly to the US provided that it stays such a far away country, which the US public cares little about in terms of the basic values forming the basis of American society. In the long run though, the question is if it is in the best interest of the US to end up on the side of the rats of international politics in contrast to supporting the people in its strive for democracy and human rights? As the story goes, "Qui vivra verra" - Who lives shall see. In the meantime, the comedian Sascha "Borat" Cohen may paradoxically be doing Nazarbayev a favour by distracting the American public from the real issues at stake. Following Borat's chimes hides Kazakh crimes.

US Pays Off Russia For Iran?

According to the New York Times, Washington is about to broker a deal with Moscow on Russian storage of US nuclear waste. In exchange, the White House expects the Kremlin to support its stance towards Iran on potential nuclear weapons' development. Thus, the US would bribe Russia to turn a blind eye on Washington's Iran policy.

The real issue at stake is, of course, Iran's plans to develop its nuclear capabilties. The Bush administration claims that Iran is trying to develop nuclear weapons, whereas Teheran argues that it is only exercising its right to develop nuclear energy. During the last year, this issue has become so heated that it on several occasions has become a concern for the UN Security Council. Therefore, as new of US-Russian negotiations on a bilateral nuclear deal broke last Saturday, speculations peaked how this would affect Iran.

So, why is Iran's nuclear affairs of concern to Moscow? Except Russia's seat on the Security Council and strategic concerns, the great reason is that Russia is Iran's biggest supplier of fuel, equipment, and expertise to the country's nuclear programme. As previously reported, Russia's nuclear industry is one of the few technically advanced sectors where Russia can still compete for shares on the international market with other technically developed states. The steady flow of incomes from nuclear supplies to Iran has been an indispensable and reliable factor for the survival of Russia's atomic sector.

If the prospects of a Russian-American nuclear deal would prove much more lucrative and stable to Moscow than continuing nuclear supplies to Iran, the US might stand a chance of turning Russia's position on Iran. This would be to pay off the Russians. However, it ignores that competing interests in Russia might complicate Moscow's ability to keep to such a deal. Still, the US has obviously been very ingenious in elaborating its proposal based on the fundamental paradigm of contempoary Russian society: When money talks - politics is silent.

By the way, today the UN "permanent five" - USA, Great Britain, France, China, and Russia - declared that they had agreed to bring Iran's nuclear programme before the UN Security Council.

Ukraine: What Pascual Doesn't Tell

Chernobyl's lesson is that a state's lies threaten its people and its sovereignty. With this argument, former US ambassador to Kiev, Carlos Pascual, sets out on a frontal attack on Ukraine's leaders, in today's Washington Post. Using Chernobyl in a distasteful parallel, Pascual criticises Kiev for corrupting the security of Ukraine. However, what is not said is often more interesting than what is actually said. Thus, implicitly accusing Ukrainian leaders for lying, Pascual himself conceals crucial facts.

The immediate background to Pascual's vociferous accusations is the New Year's gas crisis between Russia and Ukraine. Kiev was put to the test, when Russian gas company Gazprom turned off gas supplies to Ukraine in mid winter. Racing against time and "popular" hypothermia, the Ukrainian government struck the deal they could get given the circumstances. With a 47 million hostage, there was little choice but to give way to Moscow's blackmail, using the brokers and dealers at hand. The result was a construct typical to the situation - with the much criticised RosUkrEnergo. It was a slave contract on unequal terms with murky Russian-Ukrainian business interests. So, where was Washington when Moscow chose to turn the tap? The truth is that Ukraine was left to the wolves, with support more in words than in deeds.

It is true, as Pascual argues, that Ukraine has enormous problems with corruption, especially within the energy sector, but he fails to see that steps are taken to combat this evil. Getting at grips with this is a condition for reform. Thus, Ukraine is intent on fighting corruption, because there is simply no other way to develop the country. The sickness is set deep in the system - from ministers to milkmen. Everyone knows this, and the Orange Revolution expressed that it was time for a change. Corruption causes lies, but what is a lie if nobody believes in it? People knew the truth, and believed they could change. However, transforming a society is like achieving transparency. It is not just getting there. It is starting somewhere. Corruption is endemic to Ukraine, and here no other sector is easier to pick on than energy. As with any monopoly, corruption will flourish as long as one supplier, namely Russia, dominates.

However, corruption and Kiev's energy problem do not justify implicit accusations that Ukrainian politics is based on lies, by equating Soviet falsehood with current democratic rule. Nor does it warrant unjust parallels between the national trauma of Chernobyl and today's complex energy policies. Pascual claims that:

Unlike in 1986 when Soviet leaders tried to cover up Chernobyl's threat, Ukraine's leaders now have the opportunity to respond to alarm bells in the gas sector and forestall an impending danger to its own sovereignty and European energy security.

What Pascual does not tell, is that Ukraine's leaders seize any opportunity they can to safeguard energy supplies - for themselves and Europe. In doing so, Kiev is walking a thin line along the domestic-foreign frontier. Relations with Russia are tense, but there is little other alternative for now, than to rely on Moscow for energy supplies. That Ukraine is dependent "on imported gas and shady contracts" is simply an effect of this.

Still, Kiev is actively trying to find alternative solutions that could also benefit other nations. Against Russia's expressive will, Ukraine is turning the flow of oil in the Odessa-Brody pipeline towards Europe. Gas supplies from Turkmenistan are sought, admittedly though in cooperation with the infamous RosUkrEnergo. Last year, plans were announced to build a pipeline from the Caspian to Poland. Another scheme is a pipeline from Iran - and then also a pipeline to the Baltic. Finally, only last week, Georgia Ukraine, Armenia and Moldova formed a regional "Organization for Democracy and Economic Development," where one of the main purposes is to: "activize efforts to ensure energy security, including by means of diversifying routes of transportation of energy resources from Central Asia and Caspian regions to the European market."

Are these actions of a country that does not try to assume its responsibility? Obviously, Kiev is trying to find alternatives to dependence on Russian energy, and by doing so attempts to rid itself of the full-fledged corruption within the Russia-Ukraine gas trade. Therefore, seeking alternatives is breaking with the past - as much in terms of dependence as corruption. This is a fact that Pascual should acknowledge, not least because Ukraine - and not the US - is running the risk of failure.

So, are the leaders of Ukraine lying, and thereby threatening their people and the sovereignty of the nation? Judging from the actions that Pascual proposes in comparison to what Kiev actually does, such a presumption is mere nonsense. There is little doubt that the government and a majority of Ukrainians would wholeheartedly subscribe to most of the measures Pascual proposes, if they only had the power to do so. Furthermore, Kiev is already working in this direction. Pascual simply cannot be ignorant of this. The question is how great a responsibility Ukraine should assume. Kiev is already out on a limb in trying to please US and EU interests in confrontation with Russia.

Bismarck said that "Politics is the art of the possible." Galbraith begged to differ by arguing that "Politics is not the art of the possible. It consists in choosing between the disastrous and the unpalatable." It is the latter type of choices Ukraine's leaders have been facing ever since the Orange Revolution. To belittle the difficulties of these choices is outright impudent. The West rightly assumes that democracies are stable. Seldom do we realise that democratisation is volatile. In the last two years, Ukraine has made giant leaps in democratisation. Its leaders must, however, be given the benefit of the doubt that they are able to avoid the pitfalls on the road to democracy. They are little served by being stabbed in the back for not reaching perfection at once. Instead of a reward for trying, Pascual scolds them.

Furthermore, when Pascual implies that the Ukrainian leadership is lying to the people, he is in blatant disrespect of the sovereign choice of the Ukrainian people. A majority has repeatedly voted for change. On March 26, the road to reform was reconfirmed in defiance of all the hardships it involves. The people steered off from an impending backlash, not necessarily because they believed in their leaders, but because they trusted this was the right way forward.

Politics in Ukraine is a sham since the elections, and the people is witnessing the daily charade of coalition negotiations to form a new government. Still, if the politicians fail, the people will hold them accountable for erring. It is a mutual relationship with few parallels in post-soviet space. The people has, once and for all, empowered itself, and will not accept that politicians make a mockery of its sacrifices for reform and democracy. Still, few believe in miracles and the understanding is growing that progress will take time. People are no fools. Their trust will be proportionate to the achievements. The people has had its choice, and has opted for further reforms with open eyes. This is a question of political direction - not political directors. To assume that the people is not competent to judge its leaders and to see through lies, when it has done so less than three months ago is a grave misperception.

Today, what people and politicians alike realise, is the basic political and economic paradigm of diversifying risks. This is not the time for pigheadedness in going full-out either way. There is a need for moderation, even if it may involve suboptimal solutions, for the simple reason that there is no power to reach the optimal. The alternatve for the people is failure, and nobody will be there to catch them if they fall, as demonstrated by the gas crisis.

Furthermore, when Pascual calls for state intervention in the energy sector, he ignores the importance of separating state from business - the lack of which has casused many of the problems from the outset. He thus disregards the delicate balance needed for gradually introducing necessary state regulation. On a wider European scale, Kiev needs all the backing it can get for the policy it is already pursuing. Substantially greater support is needed if anything more is to be done. Such support will most likely be lacking. Pascual himself states the obvious reason for this:

The United States hardly needs another crisis in the Russia relationship as we seek Russia's help in preventing a nuclear Iran. Russia needs neither an irate European customer nor a fight with diplomatic partners seeking to prevent an Iranian nuclear bomb.

Thereby, Pascual also fails to recognise the connection between Ukraine's domestic and foreign policy. For all the domestic measures that he proposes are in direct contradiction with Russia's core interests in using energy to exert influence over its "near abroad." A situation where Moscow directly or indirectly controls Ukraine's energy sector is decidedly in the best interest of the Kremlin. The greater extent of corruption, the less degree of cohesion will Ukraine's energy policy have. As long as such a situation is maintained, Russia gets both the power and the profits from Ukraine's gas dependence. Therefore, Moscow will most likely oppose any reforms or clensing of this sector. Taking heed to Russia's interests is simply incompatible with ensuring Ukraine's and Europe's gas supplies by supporting Ukraine. This should not conceal the fact that "the EU and the US should engage Ukraine and Russia before the crisis erupts and offer to facilitate negotitation of normal commercial arrangements." Here, Pascual is completely right.

All the same, it appears that the US cannot have it both ways: Urging Ukraine forward and at the same time serving Russian interests. If the Bush administration would seriously consider Pascuals proposals, Washington may have to "walk the walk and talk the talk," and that means directly confronting Russian interests. The other way around would, to the contrary, satisfy Moscow in the short run, but also potentially paralyze progress in safeguarding Ukraine's and Europe's gas supplies in the long run. There is, however, a middle way: Trusting the sound judgement of Ukraine's leaders, that they are competent to handle the issue themselves on a regional level, and with due support from the West. This would mean the continued long-term diversification of energy supplies that Ukraine and neighbouring countries have initiated, in combination with short-term EU and US arbitration between Kiev and Moscow. By lengthy engagement, US and EU companies may also get a stake in the profits by construction of pipelines and energy production. However, trusting Ukraine's leaders is obviously the last thing Pascual would do. What he does is to urge them to pull forward in response to the dangers to their own "sovereignty and European energy security." At the same time, he apparently refers to Ukraine when stating that "Russia needs neither an irate customer nor a fight with diplomatic partners seeking to prevent an Iranian nuclear bomb." By urging Kiev forward, Pascual however creates the latter - an irate customer in the guise of Ukraine.

One cannot but agree that most of Pascual's proposals would be desirable both for Ukraine and Europe at large - including Russia. The contradiction they carry in incompatible positions for, on the one hand Russia, and on the other hand Ukraine, Europe and the US, makes them an impossible road to tread. After three years in Kiev, one would expect Pascual to understand these basic complexities when Ukrainian domestic and foreign policies converge. This is though the most important factor that Pascual doesn't tell. By concealing complex but crucial factors, he would appear to badly serve the interests of both Ukraine and US foreign policy.

To be quite blunt, Pascual needs to cut the crap. He does not tell a lie, but he is surely twisting the facts, although he should know better. What is the real political motive for this? Does he have an issue with the leaders of Ukraine, the Bush administration, or the fact that Kiev does not wholly comply with any brainchild that Bush & consortes may conjure up? Prescribing a policy in two seemingly incompatible directions is not an answer. So, what is his motive. This, only Pascual can tell.