Azerbaijan: The Stark New Energy Landscape - September, 2008

The following Stratfor article is a very interesting geopolitical analysis on the Caucasus. The article essentially claims that when Tbilisi commenced its invasion of South Ossetia, officials in Baku, feeling emboldened by Tbilisi's criminal actions, were seriously considering invading the Armenian enclave of Nagorno Karabakh. On August 12, 2008, I revealed from Yerevan that a couple of days prior to that date, while Russian forces were crushing the Georgian military, a successful military operation was carried out by Armenian forces against a strategic Azeri position in the Martakert region of Nagorno Karabakh. The reliable source that I had gotten this information from had also reported that thousands of hectares of land was liberated. However, the military operation in question was not reported on by any news agency, including Armenian, Azeri and Turkish ones. After having read Stratfor's curious revelation about Baku contemplating the invasion of the Armenian held enclave, if I were to speculate as to what happened, I would say that Yerevan was informed (most probably by Russian intelligence) of Baku's hostile intentions and was given the green light to carryout a preemptive military strike against Azeri positions in order to preempt or to diffuse the situation at hand. Consequently, with Russia's quick and stunning victory over Georgia, coupled with Yerevan's Moscow backed military action, Baku, fearing a possible disaster, abandoned their hostile intentions and decided not to respond to the Armenian incursion. In other words, it may not have been in the best interests of Baku to report on the successful Armenian operation. These are my speculations for what they are worth. I have posted additional materials on the current state of affairs on the bottom of this page.

Arevordi

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Azerbaijan: The Stark New Energy Landscape

September, 2008

Summary

Russia’s military defeat of Georgia puts Azerbaijan in a difficult position. With all of its existing energy export routes now back under Russian control, Baku faces a stark set of choices that may force it to reach an accommodation with Moscow.

Analysis

Azerbaijan is losing some $50 million to $70 million per day due to the closure of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, the Caspian Energy Alliance said Aug. 14, adding that Baku’s total losses from the closure amounted to some $500 million. The 1 million barrel per day (bpd) BTC line, which passes from Azerbaijan to Turkey via Georgia, was shut down Aug. 6 following an attack on the Turkish part of the line, claimed by a Kurdish separatist group. If not for that attack, however, it might well have been shut down anyway amid the military conflict in Georgia that began two days later. Azerbaijan exports oil and natural gas to Western energy markets via three pipelines — all of which pass through Georgia, and all of which experienced cutoffs in the past several days. Two of them — the BTC and the 150,000 bpd Baku-Supsa — carry oil. The Baku-Tbilisi-Erzurum line carries natural gas at 9 billion cubic meters per year. The pipelines were built to provide a transport route for Caspian Sea energy to reach Western markets without having to pass through Russia, which controls the majority of pipeline infrastructure into Europe. Now that Russia has established a firm military presence in Georgia, however, it is highly likely that all three lines will continue to operate, or not, at the pleasure of the Kremlin. This puts Azerbaijan in a predicament. With its export routes to the West blocked by the Russian presence in Georgia, Baku is carefully considering its options. Though other potential pipeline routes exist, they are plagued with problems that could prove insurmountable. Azerbaijan may have no real option but to try to reach some sort of accommodation with Moscow.

Initially, Baku was excited by the conflict in Georgia’s South Ossetia region because it provided a possible blueprint for dealing with Azerbaijan’s own restive separatist enclave of Nagorno-Karabakh — and for potentially imposing a new military reality on Baku’s regional rival, Armenia. If successful, such a campaign could have allowed Baku to use Armenian territory for a new energy export route. Sources tell Stratfor that, following the Georgian military’s Aug. 8 invasion of South Ossetia, Azerbaijan’s leadership convened an emergency meeting at which they reportedly gave serious consideration to invading Nagorno-Karabakh, contingent on the eventual success of the Georgian operation. However, the Georgian offensive not only failed, it resulted in the Russian invasion of Georgia proper — which has effectively suspended Tbilisi’s ability to control its own territory. Russia also used air bases in Armenia to assist in the Georgian intervention, which marked a significant change in the dynamic between Baku and Yerevan. Russia keeps military assets in both Azerbaijan and Armenia, and sells weapons to both — indeed, part of Moscow’s strategy in the Caucasus is to ensure that the two rivals remain distracted by their tense relations — but from Baku’s perspective, the Russian decision to activate its assets in Armenia means Moscow is choosing sides.

However possible it might have been for Azerbaijan to invade its neighbor, it has suddenly become inconceivable. For Baku, this is the worst-case scenario. Its energy lifelines, intended to circumvent Russian territory, are now under the overt control of the Kremlin, while its alternative of forcing a new path through Armenia is completely taken out. Baku also suddenly found itself trying to block the flood of Azeri volunteers heading to Georgia to fight the invading Russians. Azerbaijan’s government did not want to provoke Russia, especially with Russian tanks only a couple of hundred miles from Baku itself. For that matter, with a presidential election set for Oct. 15, Azeri President Ilham Aliyev does not want a security crisis on his hands. Even though Azerbaijan has been using its energy revenues to build up its military in recent years, it is nowhere near ready to defend itself from a Russian invasion. Its security situation is in many ways even more dire than that of Georgia (or even Ukraine).

Turkey, Baku’s strongest ally in the region, theoretically would not stand by if Russia invaded Azerbaijan — but then, Ankara has been silent on the Russian intervention in Georgia. To the Azeris, this is a sign that they cannot depend on the Turks to commit themselves to a fight with Moscow if push should come to shove. Also, now that Georgia is under effective Russian military control, the only route for Turkish aid to Azerbaijan is cut off — neither Iran nor Armenia would provide passage. With the Russians in control of Georgia and with domination of Armenia out of the picture, Azerbaijan’s only other feasible export route would be southward through Iran, hooking into existing Turkish pipeline infrastructure or sending exports out via the Persian Gulf. The problem with this option is one of timing: Any move into Iran would have to wait for an accommodation between Tehran and the United States over Iraq, which appears to be getting ever nearer. At $50 million in losses per day, however, Azerbaijan does not have the time to wait for these pieces to fall into place and then build a new pipeline into Iran. A Russian move to cut off all three pipelines going through Georgia would make the cost unbearable. Baku counts on its energy export revenues in order to maintain military parity with Armenia, so a sharp drop in funding could quickly become a national security issue. That leaves one other option, which from Baku’s perspective is the least desirable but the most realistic: seeking accommodation with Russia.

Russia now effectively controls the entire already-built energy transport infrastructure between Baku and Western markets. Russia could accommodate transport of Azeri energy through Georgia for the right price. That price would be both financial and political: Azerbaijan would need to align with Moscow on matters of import in order to keep the pipelines open. Baku also could ship its natural gas through Russia proper via pipelines such as Baku-Rostov-on-Don, which used to provide Azerbaijan with natural gas supplies before it became a net exporter. There also is the Baku-Novorossiysk oil pipeline, which has a capacity of nearly 200,000 bpd, although very little Azeri crude normally goes through it. Azerbaijan has tried to avoid shipping its energy exports through Russian pipelines while other feasible options were open. But Baku may have to reconsider now that Russia holds all the cards.

Source: http://www.stratfor.com/analysisazer...ergy_landscape


The following was the official reaction from Baku when Tbilisi first began their invasion of South Ossetia.

Baku: Georgia proved that Azerbaijan "has the right to return its land by use of force"

Georgia has proved that peaceful talks is not the only way to restore territorial integrity, says a statement issued by the Azerbaijani Foreign Ministry on the recent development in the Georgian-Ossetian conflict zone. It means that Azerbaijan "has the right to return its lands by use of force, the statement says, Bakililar.az reports.

Source: http://www.panarmenian.net/news/eng/?nid=26850


In related news:

Georgia Eager to Rebuild Its Defeated Armed Forces

Georgian soldiers passing destroyed Georgian vehicles as they retreat from their positions near the town of Gori

Just weeks after Georgia’s military collapsed in panic in the face of the Russian Army, its leaders hope to rebuild and train its armed forces as if another war with Russia is almost inevitable. Georgia is already drawing up lists of options, including restoring the military to its prewar strength or making it a much larger force with more modern equipment, like air-defense systems, modern antiarmor rockets and night-vision devices. Officials at the Pentagon, State Department and White House confirmed that the Bush administration was examining what would be required to rebuild Georgia’s military, but stressed that no decisions had been made. The choices each pose difficult foreign policy questions. Georgia’s decision to attack Russian and South Ossetian forces raises questions about the wisdom of further United States investment in the Georgian military, which in any case would further alienate Russia. Not doing so could lead to charges of abandoning Georgia in the face of Russian threats. In Moscow, President Dmitri A. Medvedev said Tuesday in an interview that he no longer considered President Mikheil Saakashvili to be Georgia’s leader, calling him a “political corpse.”

Russian soldiers transport Georgian prisoner of war in Poti

Georgian statements have hardened as well, even before the army has identified and buried all of its dead. “Our mission is to protect our country from Russian aggression,” Davit Kezerashvili, Georgia’s 29-year-old defense minister, said in an interview last week when asked what missions the military would be organized to perform. “Large-scale Russian aggression. The largest aggression since the middle of the 20th century.” Russian officials last week repeatedly expressed concern about the possibility that the United States would undertake a major effort to rebuild Georgia’s military. “The Americans will enter Georgia,” said Dmitri O. Rogozin, Russia’s representative to NATO. “I believe that soon there will be an American military base in Georgia, officially. And not only advisers. There will be a flag, tanks, artillery, aviation, even marines.” So far the Bush administration has chosen to trumpet its humanitarian efforts in Georgia, and has avoided publicly discussing efforts to study how best to rebuild the Georgian military. The official silence reflects worries in Washington about tensions between the United States and Russia, officials said, and explains why the Bush administration policy makers and military officers who discussed these efforts did so only after demanding anonymity.

Russian soldier guarding captured Georgian tanks

One brief, public discussion of American efforts came last Thursday, when Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said at a news conference that Georgia was “a very important country to us” and that the United States intended to continue the military-to-military relationship. “It’s going to be very important that the government of Georgia makes some decisions about what they want to do, and then I think the U.S. would be in a position to respond to that,” he said. Military rebuilding will take years, which means that long-term decisions about American support to Georgia will fall to the next presidential administration. Republicans and Democrats alike have signaled strong support for Georgia. Mr. Saakashvili has cultivated close ties to both the McCain and Obama campaigns. Senator Joseph R. Biden Jr., the Democratic nominee for vice president, visited Mr. Saakashvili last month, as did Cindy McCain, the wife of Senator John McCain, the presumptive Republican nominee. Mr. McCain has been a vocal proponent of Mr. Saakashvili’s government, and a strong critic of the Kremlin. Defense officials in Tbilisi, the Georgian capital, said that at a minimum they hoped to re-equip the army’s four existing brigades with modern equipment, and increase the size of the country’s air force. Georgia’s military now includes 33,000 active-duty personnel.

Georgian military base after Russian troops leave

Mr. Saakashvili said he also planned to emphasize officer training in the years ahead. “We have no problem with the individual skills of soldiers,” he said in an interview. “We need to do this same thing with the officers.” Georgia also hopes to acquire an integrated air-defense system that covers the country’s entire airspace, to arm its land forces with modern antiarmor rockets, and to overhaul the military’s communication equipment, much of which was rendered useless by Russian jamming during the brief war. It also wants to distribute large numbers of night-vision devices to the country’s forces, which could help create parity in the field against the numerical superiority of Russian armored units. Russia’s military, while able to overpower and scare off the inexperienced Georgian Army, went into battle with aging equipment, including scores of tanks designed in the 1960s, and armored vehicles that broke down in large numbers along Georgia’s roads. One option, Mr. Kezerashvili said, would include creating up to four more combat brigades. He said that training and equipping new brigades, re-equipping existing forces and installing a modern air-defense network could cost $8 billion to $9 billion. “Together with Europeans and the United States, we have to rebuild our army and make it stronger, because it is in the common interest,” he said, adding that Russia could attack another neighbor, and must be deterred. “Who will be the next victim? Nobody knows.” But as Georgia and the West begin to discuss military collaborations, the conversation is informed by the events of last month, in which the Georgian military scattered under fire. Georgia’s own analysis is straightforward: its principal vulnerabilities, which it said proved decisive, were its comparative weakness to Russian air power and its inability to communicate effectively in combat.

Georgian soldiers bury their unidentified dead in a mass grave

These problems, according to Mr. Kezerashvili and Batu Kutelia, Georgia’s first deputy defense minister, could be remedied with investments in equipment. “We know 100 percent that we need a very, very sophisticated air-defense system, that is multi-layered, to defend all of our airspace,” Mr. Kutelia said. But interviews with Western military officers who have experience working with Georgian military forces, including officers in Georgia, Europe and the United States, suggested that Georgia’s military shortfalls were serious and too difficult to change merely by upgrading equipment. In the recent war, which was over in days, Georgia’s Army fled ahead of the Russian Army’s advance, turning its back and leaving Georgian civilians in an enemy’s path. Its planes did not fly after the first few hours of contact. Its navy was sunk in the harbor, and its patrol boats were hauled away by Russian trucks on trailers. The information to date suggests that from the beginning of the war to its end, Georgia, which wants to join NATO, fought the war in a manner that undermined its efforts at presenting itself as a potentially serious military partner or power.

Russian troops giving bread to stranded Georgian civilians on the road to Tbilisi

Mr. Saakashvili and his advisers also say that even though he has no tactical military experience, he was at one time personally directing important elements of the battle — giving orders over a cellphone and deciding when to move a brigade from western to central Georgia to face the advancing Russian columns. In the field, there is evidence from an extensive set of witnesses that within 30 minutes of Mr. Saakashvili’s order, Georgia’s military began pounding civilian sections of the city of Tskhinvali, as well as a Russian peacekeeping base there, with heavy barrages of rocket and artillery fire. The barrages all but ensured a Russian military response, several diplomats, military officers and witnesses said. After the Russian columns arrived through the Roki Tunnel, and the battle swung quickly into Russia’s favor, Georgia said its attack had been necessary to stop a Russian attack that already had been under way. To date, however, there has been no independent evidence, beyond Georgia’s insistence that its version is true, that Russian forces were attacking before the Georgian barrages.

A Russian military patrol in Tkhinvali walks past a destroyed Georgian tank

During the battle, one Western military officer said, it had been obvious that Georgia’s logistical preparations were poor and that its units interfered with each other in the field. This was in part because there was limited communication between ground forces and commanders, but also because there was almost no coordination between police units and military units, which often had overlapping tasks and crowded one another on the roads. One senior Western military official said that one of the country’s senior generals had fled the battle in an ambulance, leaving soldiers and his duties behind. Georgia’s Defense Ministry strongly denies this. No one disputes that the army succumbed to chaos and fear, which reached such proportions that the army fled all the way to the capital, abandoning the city of Gori without preparing a serious defense, and before the Russians had reached it in strength. It littered its retreat with discarded ammunition.

Source: http://www.nytimes.com/2008/09/03/wo...html?ref=world

Geopolitical Diary: Turkey's Options

With Cold War tensions building in the Black Sea, the Turks have gone into a diplomatic frenzy. Turkish Foreign Minister Ali Babacan had his phone glued to his ear on Thursday speaking to his U.S., British, German, French, Swedish and Finnish counterparts, as well as to the NATO secretary-general and various EU representatives. The Turks are also expecting Georgian Foreign Minister Eka Tkeshelashvili to arrive in Istanbul on Aug. 31. And Russian Foreign Minister Sergei Lavrov is due to arrive for a separate meeting with Turkish leaders early next week. The Turks have a reason to be such busy diplomatic bees. A group of nine NATO warships are currently in the Black Sea ostensibly on routine and humanitarian missions. Russia has wasted no time in sounding the alarm at the sight of this NATO buildup, calling on Turkey — as the gatekeeper to the Dardanelles and Bosporus straits between the Black and Mediterranean seas — to remember its commitment to the Montreux Convention, which places limits on the number of warships in the Black Sea. As a weak naval power with few assets to defend itself in this crucial frontier, Russia has every interest in keeping the NATO presence in the Black Sea as limited and distant as possible.

Turkey is in an extremely tight spot. As a NATO member in control of Russia’s warm-water naval access to the Black Sea, Turkey is a crucial link in the West’s pressure campaign against Russia. But the Turks have little interest in seeing the Black Sea become a flashpoint between Russia and the United States. Turkey has a strategic foothold in the Caucasus through Azerbaijan that it does not want to see threatened by Moscow. The Turks also simply do not have the military appetite or the internal political consolidation to be pushed by the United States into a potential conflict — naval or otherwise — with the Russians. In addition, the Turks have to worry about their economic health. Russia is Turkey’s biggest trading partner, supplying more than 60 percent of Turkey’s energy needs through two natural gas pipelines (including Blue Stream, the major trans-Black Sea pipeline), as well as more than half of Turkey’s thermal coal — a factor that has major consequences in the approach of winter. Turkey has other options to meet its energy needs, but there is no denying that it has intertwined itself into a potentially economically precarious relationship with the Russians. And the Russians have already begun using this economic lever to twist Ankara’s arm. A large amount of Turkish goods reportedly have been held up at the Russian Black Sea ports of Novorossiysk, Sochi and Taganrog over the past 20 days ostensibly over narcotics issues. Turkish officials claim that Turkish trucks carrying mostly consumer goods have been singled out for “extensive checks and searches,” putting about $3 billion worth of Turkish trade in jeopardy. The Turks have already filed an official complaint with Moscow over the trade row — with speculation naturally brewing over Russia’s intent to punish Turkey for its participation in the Baku-Tbilisi-Ceyhan pipeline and to push Ankara to limit NATO access to the Black Sea.

But the Russians are playing a risky game. As much as Turkey wants this conflict to go away, it still has cards to play — far more than any other NATO member — if it is pushed too hard. As Turkish State Minister Kursat Tuzmen darkly put it, “We will disturb them if we are disturbed. We know how to disturb them.” If Turkey gets fed up with Russian bullying tactics, there is little stopping it from allowing an even greater buildup of NATO warships in the Black Sea to threaten the Russian underbelly. The Turks could also begin redirecting their energy supply away from the Russians, choosing instead to increase their natural gas supply from Iran or arrange for some “technical difficulties” on the Blue Stream pipeline. The Russians also ship some 1.36 million barrels per day of crude through the Black Sea that the Turks could quite easily blockade. These are the easier and quicker options that Turkey can employ. But there are some not-so-quick and not-so-easy options for Turks to consider as well, including riling up the Chechens in the northern Caucasus or the Turkic peoples in Central Asia and within the Russian Federation to make trouble for Moscow. These are not options that Ankara is exactly eager to take, but they remain options, and will be on both the Turkish and Russian foreign ministers’ minds when they meet in the coming days.

Source: http://www.stratfor.com/geopolitical...urkeys_options