Russia and Georgia: All About Oil

In commenting on the war in the Caucasus, most American analysts have tended to see it as a throwback to the past: as a continuation of a centuries-old blood feud between Russians and Georgians, or, at best, as part of the unfinished business of the Cold War. Many have spoken of Russia’s desire to erase the national “humiliation” it experienced with the collapse of the Soviet Union 16 years ago, or to restore its historic “sphere of influence” over the lands to its South. But the conflict is more about the future than the past. It stems from an intense geopolitical contest over the flow of Caspian Sea energy to markets in the West.

This struggle commenced during the Clinton administration when the former Soviet republics of the Caspian Sea basin became independent and began seeking Western customers for their oil and natural gas resources. Western oil companies eagerly sought production deals with the governments of the new republics, but faced a critical obstacle in exporting the resulting output. Because the Caspian itself is landlocked, any energy exiting the region has to travel by pipeline – and, at that time, Russia controlled all of the available pipeline capacity. To avoid exclusive reliance on Russian conduits, President Clinton sponsored the construction of an alternative pipeline from Baku in Azerbaijan to Tbilisi in Georgia and then onward to Ceyhan on Turkey’s Mediterranean coast -- the BTC pipeline, as it is known today.

The BTC pipeline, which began operation in 2006, passes some of the most unsettled areas of the world, including Chechnya and Georgia’s two breakaway provinces of Abkhazia and South Ossetia. With this in mind, the Clinton and Bush administrations provided Georgia with hundreds of millions of dollars in military aid, making it the leading recipient of U.S. arms and equipment in the former Soviet space. President Bush has also lobbied U.S. allies in Europe to “fast track” Georgia’s application for membership in NATO.

All of this, needless to say, was viewed in Moscow with immense resentment. Not only was the United States helping to create a new security risk on its southern borders, but, more importantly, was frustrating its drive to secure control over the transportation of Caspian energy to Europe. Ever since Vladimir Putin assumed the presidency in 2000, Moscow has sought to use its pivotal role in the supply of oil and natural gas to Western Europe and the former Soviet republics as a source both of financial wealth and political advantage. It mainly relies on Russia’s own energy resources for this purpose, but also seeks to dominate the delivery of oil and gas from the Caspian states to the West.

To further its goals in the Caspian, Putin and his protégé Dmitry Medvedev – until recently the chairman of Gazprom, the Russian state gas monopoly – have enticed (or browbeaten) the leaders of Kazakhstan, Turkmenistan, and Uzbekistan into building new gas pipelines through Russia to Europe. The Europeans, fearful of becoming ever more dependent on Russian-supplied energy, seek to build alternative conduits across the Caspian Sea and along the route of the BTC pipeline in Azerbaijan and Georgia, bypassing Russia altogether.

It is against this backdrop that the fighting in Georgia and South Ossetia has been taking place. The Georgians may only be interested in regaining control over an area they consider part of their national territory. But the Russians are sending a message to the rest of the world that they intend to keep their hands on the Caspian Sea energy spigot, come what may. This doesn’t necessarily mean occupying Georgia outright, but they will certainly retain their strategic positions in Abkhazia and South Ossetia – for all practical purposes, daggers aimed at the BTC jugular. So even if a cease-fire is put into effect, the struggle over energy resources – sometimes hidden and stealthy, sometimes open and violent – will continue long into the future.