Many eyebrows were raised around the world when Vladimir Putin made public Moscow's desire to see the formation of a Russian-led Eurasian economic union. Putin's proposal isn't new. As a matter of fact, Moscow has talked about such an economic union for quite a few years. Why is it making headlines now? To begin with, it has been officially announced that Putin will indeed be returning to power in the very near future. Therefore, everything Putin mentions will henceforth be placed under an electron-microscope. The West realizes that Medvedev's political term during which the Kremlin wanted to show the world a soft face is fast coming to an end and the Czar-like man they dreaded for so many years is coming back. Moreover, due to the deepening economic crisis plaguing the Western world, creating a Moscow-led Eurasian economic union actually seems more realistic today than it did in the past.
As the West continues its historic decline, alternative economic unions similar to the one proposed by Putin are beginning to look more attractive to nations of the world. Needless to say, the political West has been panicking in recent years. They are concerned about losing their global hegemony to upstarts such as China, Russia and India. They are concerned about dwindling energy resources under their direct control. They are concerned about free nations such as Russia, Iran and Venezuela executing politics independently and engaging in commerce free of the West. After nearly over a century of more-or-less controlling global commerce and exploiting natural resources around the world, new powers are emerging today to threaten their supremacy.
Yes, the political West is indeed panicking and we are seeing the results of their panic in places like Serbia, Iraq, Afghanistan, Libya, Syria, Sudan and Iran.
As nations with dependencies on financial institutions connected with Washington are only now finding out, economically speaking, the United States is a spent force. The US is no longer a great industrial power and it no longer has access to ample natural resources. Teetering one's economy to Washington's system of finance is a recipe for disaster. As the Western world plunges further into an economic quagmire of its own making, more-and-more nations around the world will be seeking to break away from IMF type slave-masters. One prime candidate that needs to seriously review its relationship with the West is Greece. Greece has been mistreated by the Western alliance for too many years. Greece today is broken beyond repair. Greece needs a drastic makeover. Greece needs to abandon NATO and the EU. Besides which, Athens never felt quite comfortable being there anyway. I am sure many Greeks will agree with me when I say that Greece's natural place is in an economic/political union led by Moscow. Greece's salvation lies in the east. Of course the same applies to nations like Armenia and Serbia; as well as Georgia, but Georgians have yet to realize this plain fact.
The gilded age of the post-Soviet years for the political Western is all but over now. We saw the fall of National Socialism and Communism, we are now witnessing the fall of Western Capitalism. Moreover, there are no "evil empires" with which to scare the western public into compliance with. The Western alliance has in fact become the evilest of empires. Whether its the way they have treated their disgruntled masses or the way they have destroyed sovereign nations around the world, the Western alliance has become a source of evil today. The alluring mask they had worn for so many years has all but come off and their grip over the global community is slowly slipping.
Consequently, certain powers around the world are taking this opportunity to restructure their financial systems and readjust their political allegiances. The Russian Federation is gradually becoming one of the political and economic beacons that others are now slowly beginning to rallying around. Having already secured the allegiance of Central Asian republics and having engaged China in many lucrative trade deals in recent years, Moscow is now interested in engaging Europe and the Middle East as well. Having already secured the production and/or distribution of Central Asian energy, Moscow wants to become the economic link connecting east with the west. Having already begun massive reconstruction programs, Moscow wants to attract tourists and investors. Moscow wants to be an intercontinental hub for trade. In short, Moscow wants to resurrect the Silk Road on its territory.
It's not all talk. One of the more fascinating projects envisioned by Moscow for instance is the Moscow-New York rail route. Moscow is also planning on setting up its very own international development fund for nations in need. The fund in question is a strategic measure specifically meant to aid former Soviet nation on Russia's periphery handle their financial problems free of the West. In doing so, Russia is clearly signaling to the world that it wants to become a viable alternative to the West. Moscow has begun embarking on several major infrastructural projects meant to boost its economic standing by essentially turning itself into a transcontinental trade hub. Rebuilding its infrastructure, establishing new aid agencies and forming economic unions are not the entire story about Russia's revival as a Eurasian superpower. Hoping to cater to its increasingly affluent population and attracting foreign tourists in doing so, Moscow is planning an ambitious 8 billion dollar north Caucasus resort complex that will essentially stretch from the Black Sea to the Caspian Sea.
It's not all soft power either. After all, we are still talking about Russia. Therefore, it must also be mentioned that modernizing its military, producing new generations of weaponry and funding innovative aerospace projects have also a been part of Moscow economic offensive -
Stealth & wealth in Moscow: MAKS 2011 up above the world: http://www.youtube.com/user/RussiaToday#p/u/5/AwcPfoFd2Bc
Mars 500 Mission: Deep space survival possible: http://www.youtube.com/user/RussiaToday#p/search/2/5NZjSPe4eAM
At a time when the West is sinking deeper into a financial quagmire, Moscow's economy is steadily growing and diversifying. At a time when the national infrastructure of the United States is literally falling apart due to a lack of rebuilding funds (due to the very high cost of maintaining a global empire and engaging in military expeditions throughout the world), Moscow is embarked on a massive rebuilding program. At a time when NASA's space program has been all but abandoned, Moscow's space program continues to grow (Russia is today the only nation capable of putting human into space). Realizing that it has been too heavily dependent on its natural wealth, Moscow is wisely investing large amounts of its petro-dollars into the future of the Russian Federation. These major projects that are meant to bare fruit in the future.
After decades of relying on its virtually inexhaustible natural wealth, Moscow is wisely beginning to use its petro-dollars to diversify its economy and invest in new technologies. Due to its closeness to Moscow, nations like Armenia will benefit immensely from the situation, either directly or indirectly. There is also the real possibility today for Armenia to actually become a regional transit hub and a center of technology if or when Moscow's ambitious economic agendas are realized. Regional conflicts, however, need to end for trade and development to begin.
Much of the global community, America in particular, is not aware of these major Russian projects simply because the Western press relentlessly presents Russia in very bleak colors and in derogatory terms. Pick up any news article from any mainstream news agency in the United States and you will immediately understand what I mean. Despite it all, however, Russians are self-reflecting. Russians are also reassessing their role in the world. After the horrors of Bolshevism, after the disappointment of communism, after the debacle of crony capitalism of the 1990s, Russians are again attempting to regroup and stand up. Needless to say, the 20th century was a very bloody page in their one thousand year old history. The 21th century is expected to be their revival.
Between the unspeakable crimes of Bolshevism and the devastating war that Bolshevism’s rise caused with Nazi Germany, the first half of the 20th century was a horrible nightmare for Russians. In many respects, the Russian nation is only now stepping out of the old world and into the modern world. And with so much potential at their disposal and with capable leaders at the helm, Russia's future looks bright - that is if Russians are able to finally discipline themselves and if they are able to effectively ward-off their many envious antagonists.
Below this commentary you will find various relevant news reports vividly highlighting Moscow's ambitious economic efforts throughout Eurasia and beyond. Please make some time and look through them all, and when doing so try to think of the impact such an economic revival in Eurasia will have on our little, poor, remote and embattled Armenia - that is if the Western alliance allows it.
On a somewhat related matter: Many know of the BTC energy pipeline project but very few know about the no-less important Western-Turkish-Georgian joint project known as the New Transcaucasian Railway or the BTK (Baku-Tbilisi-Kars). Envisioned to become a rail-link connecting western Europe to the Far-east, the project was specifically designed to by-pass Armenia, Iran and Russia. The National Geographic presentation towards the bottom of this page is a very interesting report about the project in question.
Throughout the 1990s and the early 2000s, the Western alliance and their regional supporters were feverishly planning far-reaching projects meant exploit the region's assets free of Yerevan, Moscow and Tehran. The Western-backed insurgency inside Iran, the Western-backed insurgency inside north Caucasus and Western support for Baku against Armenians of Nagorno Karabakh served towards these political and economic ends. However, a lot has changed since the "palace coup" in Moscow some twelve years ago and since the 2008 summer war in Georgia. Eurasia's geopolitical climate has drastically changed. Moscow is currently countering Western moves by various far-reaching measures of its own from western Europe to China. The new reality on the ground in the Caucasus has more-or-less abolished Western plans for the region.
Although resurgent, we must also recognize that Russia is not yet powerful enough or self-confident enough to impose its political will far from its borders. Although resurgent, Moscow is still not capable of truly challenging the Anglo-American-Zionist alliance's global reach and power. After the historic debacle of the 1990s, the Kremlin is in the slow process of standing up - economically, militarily and politically. For the next five to ten years, Moscow's primary task will be to secure its Eurasian fortress. And Armenians must realize, and hopefully exploit, the fact that the Caucasus is the Russian fortress’s southern gate.
The global community can expect Russia to impose its political will on political matters that are closer to it (e.g. matters pertaining to Syria, Iran, Georgia, Belarus, Ukraine). For all intents and purposes, Kremlin officials look at Armenia more-or-less as a strategic Russian outpost. Thus, Moscow will ensure Yerevan's survival as if Armenia is Russia. And this is essentially the secret to Armenia’s in a place like the Caucasus. And this is the opportunity that Armenians need to effectively exploit to strengthen Armenia.
Although the world seems to be headed towards a third world war, the course can still be changed. A lot of good can still be done. All that is essentially required is for the political West to simply let go its relentless pursuit of a global empire and drastically tighten its belt. The western world needs to free itself of the death grip various political and financial interests have had over it. Instead of wasting trillions on waging wars around the world in the name of wealth, power and the Zionist state, Washington should instead join emerging major powers in developing technology and a global infrastructure that serves humanity.
Armenians need to wake up from their silly EUrotic dreams and realize that the economic union envisioned by Moscow is where Armenia naturally belongs! Although Armenia has a number of Washingtonian whores trying to sabotage anything that would help develop the embattled region (see article at the very bottom of this page), I predict Armenia will find itself in this economic union within the near future. In the meanwhile, Armenian officials needs to stop enslaving the young republic to the political West by accepting loans from Western money cartels or by allowing subversive Western-funded NGOs to open shop in Armenia. Armenia's interior ministry must also actively continue its monitoring of various public figures with active ties to intelligence agencies in the West.Arevordi
Vladimir Putin Wants Soviet-Style Power Bloc to Rival EU
Vladimir Putin has said he wants to forge a "Eurasian Union" on the vast swath of territory that used to be the Soviet Union to compete with the European Union and the United States.
Speaking six months before he reassumes the Russian presidency for the third time, Mr Putin said he wanted to create a global power bloc that would straddle one fifth of the earth's surface and unite almost 300 million people. "We have a great inheritance from the Soviet Union," he wrote in an article extolling the idea in the daily Izvestia newspaper. "We inherited an infrastructure, specialised production facilities, and a common linguistic, scientific and cultural space. It is in our joint interests to use this resource for our development."
The Russian prime minister called the 1991 collapse of the Soviet Union "the greatest geopolitical catastrophe of the 20th century" and is known for revelling in Soviet nostalgia. He denied his new plan was an attempt to resurrect the Russian-led superpower, insisting that the Eurasian Union would be freer than the Soviet Union and membership would be voluntary. "We are not talking about recreating the USSR," Mr Putin claimed. "It would be naive to try to restore or copy what was in the past. But time dictates that we should have closer integration based on values, politics and economics."
The Soviet Union included 15 different republics which became independent countries after its chaotic collapse in 1991. Three of those countries – Estonia, Latvia and Lithuania – have since become members of the EU and it is unimaginable that they would sign up to the Eurasian Union. Georgia, a country that lost 20 per cent of its territory in a war against Russia in 2008, would also be highly unlikely to acquiesce. But Mr Putin said an existing kernel of three countries – Russia, Kazakhstan and Belarus – were already locked into a new common economic space with shared customs and other rules that would serve as the foundation for the Eurasian Union.
Mr Putin said he expected Tajikistan and Kyrgyzstan to sign up soon. "We are talking about a model of a powerful supranational union capable of becoming one of the poles in the modern world," he said. Andrei Okara, a political analyst, said: "Putin does not just see himself as a Russian leader but on a historical and global scale. He wants to make grandiose political moves that will leave their mark on history."
Come January this is due to expand into a “common economic space”, ensuring free movement of goods, services and capital across a single market of 165m people – 60 per cent of the former Soviet population. At a Moscow summit this month, prime ministers of the three states set an even more ambitious target – turning the grouping into a “Eurasian economic union” by 2013. There is even talk, down the line, of a common currency.
“This is truly an event of great interstate and geopolitical significance,” Mr Putin said after the summit. “For the first time since the collapse of the Soviet Union, the first real step has been made towards restoring natural economic and trade ties in the post-Soviet space.”
That may be hyperbole. But unlike earlier attempts at reintegrating former Soviet states, this one is making progress. Mr Putin also suggested that once the common economic space is established, its members should start talks on a free-trade agreement between the bloc and the EU. Given Russia has spent 18 years negotiating – so far unsuccessfully – membership of the World Trade Organisation, such a grand agreement seems a distant prospect. Yet, if ever achieved, it would fulfil a vision Mr Putin set out in Germany last November of a “harmonised community of economies from Lisbon to Vladivostok”.
Rebuilding ties between former Soviet states has long been Mr Putin’s goal. In 2000 he signed an agreement with half a dozen countries to create the Eurasian Economic Community, or EurAsEc. That, however, has remained largely a talking shop. Since 2009, he has pursued deeper integration with two EurAsEc members towards the current customs union. Nursultan Nazarbayev, Kazakhstan’s authoritarian president, embraced the plan. Belarus, its economy heavily dependent on Russia’s, was corralled into it with energy-related carrots and sticks.
“The vision has become more and more of creating a European Union in the space of the former Soviet Union,” says Lilit Gevorgyan, analyst at the consultancy IHS Global Insight. The customs union has adopted chunks of the acquis communautaire, the EU’s body of law, says a senior Russian official. Copying an existing model saves work, but it could, in theory, one day ease the task of creating a free-trade zone with the EU.
The deepening customs union has the typical advantages of stimulating business development by removing trade barriers. It could also help restore horizontal links between industries and enterprises severed when the USSR collapsed. Moreover, by tying Kazakhstan – former Soviet central Asia’s most successful economy – to Russia, it counters growing Chinese influence in the region. Neighbouring Kyrgyzstan and Tajikistan have also expressed interest in joining.
Intriguingly, the union might succeed where other attempts have failed and force Russia to improve its business climate. Senior officials in Astana, the Kazakh capital, talk of enticing Russian companies to re-register in Kazakhstan which, they say, offers a better environment.
On Russia’s European flank, the customs union provides both an incentive and a mechanism for Russia to support Belarus – mired in a financial crisis that has forced a sharp devaluation – and prevent public unrest that could see Minsk shift towards the EU. That is despite Mr Putin’s personal dislike of Belarus president Alexander Lukashenko. “Russia will keep Belarus on a drip,” suggests Ms Gevorgyan. “They will give it enough, through subsidised energy supplies, to keep the economy afloat, but not enough for Lukashenko to feel emboldened to challenge Russia.”
People who know him say Mr Putin would dearly love to “complete” the union by bringing in Russia’s big Slavic neighbour, Ukraine. Adding its 45m people would extend the bloc to three-quarters of the former Soviet population. Whether Ukraine joins or not, Mr Putin has cleverly taken advantage of the west’s preoccupation with its debt problems, says Nikolai Petrov of the Moscow Carnegie Centre think-tank.
“When Russia is relatively in a better position than many euro countries, it’s a good time to promote its integration ideas,” he says.
Regardless of interpretation details, the reaction of the Western media to the integration project unveiled by the Russian premier was uniformly negative and reflected with utmost clarity an a priori hostility towards Russia and any initiatives it floats. Mao Zedong, though, used to say that facing pressure from your enemies is better than being in such a condition that they do not bother to keep you under pressure.
It helps to understand why, at the moment, Cold War-style headlines are constantly popping up in Western media and what perceived threat the West discerned in Putin's recent Eurasian integration. The obvious explanation is that, if implemented, the plan would come as a geopolitical challenge to the new world order, to the dominance of NATO, the IMF, the EU and other supranational bodies, and to the undisguised US primacy. Today's increasingly assertive Russia suggests and is ready to start building an inclusive alliance based on principles providing a viable alternative to Atlantism and neoliberalism. It is an open secret that these days the West is putting into practice an array of far-reaching geopolitical projects, reconfiguring Europe in the wake of the Balkan conflicts and against the backdrop of the crises provoked in Greece and Cyprus, assembling the Greater Middle East based on serial regime changes across the Arab world, and, as a relatively novel design, implementing the Asia project in which the recent disaster in Japan was an active phase.
In 2011, the intensity of geopolitical dynamics was unprecedented since the collapse of the USSR and the Eastern Bloc, with all major countries and international bodies contributing. Moreover, the current impression is that military might somehow became a legitimate instrument in international politics. Just days ago, Moscow drew avalanche criticism after vetoing the UN Security Council resolution which could authorize a replay of the Libyan scenario in Syria. As a result, US permanent envoy to the UN S. Rice slammed Russia and China over the veto, while French foreign minister Alain Juppé declared that “it is a sad day for the Syrian people. It is a sad day for the Security Council”. During the heated UN security Council debates on September 5, Syrian representative lambasted Germany and France, and charged the US with perpetrating genocide in the Middle East. After that, S. Rice accused Russia and China of hoping to sell arms to the Syrian regime instead of standing by the Syrian people and stormed out of the meeting, and French envoy Gérard Araud opined that “No veto can clear of their responsibility these Syrian authorities that have lost any legitimacy by murdering its own people”, leaving an impression that murdering people, as in Yugoslavia, Afghanistan, Iraq, and Libya, should be a NATO privilege.
Moscow's Western “partners” are outraged whenever Russia, in concert with China, puts obstacles in the way of the new world order. Syria, albeit a regionally important country, only fleetingly tops the agenda, but Putin's ambitious plan for the whole Eurasia - “reaching a higher level of integration – a Eurasian Union” - had to be expected to evoke deep and lasting concerns in the West. Moscow openly challenges the West's global dominance by “suggesting a model of a powerful supranational union that can become one of the poles of today's world while being an efficient connecting link between Europe and the dynamic Asia-Pacific Region”. No doubt, Putin's messages that “the combination of natural resources, capital, and strong human potential will make the Eurasian Union competitive in the industrial and technological race and the race for investor money, new jobs, and advanced production facilities” and that “along with other key players and regional institutions such as the EU, the USA, China, and APEC, it will ensure the sustainability of global development” sounded alarming to Western leaders.
Neither the collapse of the USSR and the bipolar world nor the subsequent proliferation of pro-Western “democracies” marked a final point in the struggle over global primacy. What followed was an era of military interventions and displacements of defiant regimes with the help of information warfare and the omnipresent Western soft power. In this game, Eurasia remains the main prize in line with John Mackinder's geopolitical imperative by which “Who rules East Europe commands the Heartland; who rules the Heartland commands the World-Island; who rules the World-Island controls the world”.
In the late XX century the US became the first-ever non-Eurasian country to combine the roles of the world's top power and the final arbiter in Eurasian affairs. In the framework of the new world order doctrine, the US and the West as a whole see Eurasia as a zone of key importance to their economic development and growing political might. Global dominance is an openly stated and constantly pursued goal of the Euro-Atlantic community and its military and financial institutions – NATO, the IMF, and the World Bank - along with the Western media and countless NGOs. In the process, the Western establishment remains fully aware that, in Z. Brzeziński's words, „America's global primacy is directly dependent on how long and how effectively its preponderance on the Eurasian continent is sustained”. Sustaining the “preponderance”, in turn, takes control over Europe, Russia, China, the Middle East, and Central Asia.
Untamed Western hegemony in Europe, Central Asia, and, to an extent, in the Middle East and even Russia used to count as an unquestionable outcome of the past couple of decades, but at the moment the situation appears fluid. Western, Chinese, and Russian watchers alike are predicting an imminent failure of the neoliberal globalization model embedded in the new world order, and the time is coming for the political class to adopt the view.
By opening up opportunities to shield original models of national development from Atlantist pressure and to maintain real international security, Putin's new integration project holds a major promise for Russia and its allies, and thereby presents Russia's foes with a serious problem. Neither Russia nor any other post-Soviet republic can survive in today's world single-handedly, and Russia as Eurasia's key geopolitical player with economic, political, and military potentials unparalleled across the post-Soviet space can and should stake a bid for an alternative global architecture.
The West's allergy to Putin's plan is therefore explainable, but, regardless of the opposition the project is bound to run into, of the weakness of some of its elements, and of the potential difficulty of putting it into practice, the Eurasian integration project grew out of the life of the post-Soviet geopolitical and cultural space and is consonant with current global trends. Surviving, preserving the economic and material foundations of national existence, keeping traditions alive, and building a secure future for the children are the objectives the Eurasian nations can accomplish only if they stay aligned with Russia. Otherwise, isolation, sanctions, and military interventions awaits them…
He even floated the idea of a common currency, going far beyond the customs deals Russia has already signed with Belarus and Kazakhstan. Mr. Putin denies that he wants another Soviet Union, despite his public laments for the “tragedy of century,” as he calls the breakup of the Communist empire. In fact, his proposal looks more like a dark mirror of the European Union, with some of its economic advantages but none of its insistence on democracy or human rights. The timing of Mr. Putin’s announcement, coming as the Euro zone struggles with a solvency crisis, highlights a reversal of fortunes in his part of the world. Europe’s influence appears to be waning, leaving the former Soviet republics orphaned by the distractions of bailouts and debts, at precisely the moment of Russia’s growing assertiveness. This shift could play out in several ways:
1. Thwarting NATO and EU expansion
Russia once feared encroachment by the European Union near its borders, so it must have been satisfying for Mr. Putin to see a recent meeting of the EU’s outreach group, the Eastern Partnership, dismissed in the Financial Times as a “damp squib.” None of the six states in the partnership process – Ukraine, Moldova, Azerbaijan, Armenia, Georgia, or Belarus – seem poised for EU membership. Nor do Ukraine and Georgia appear likely to join NATO any time soon, despite official statements from the military alliance that its “door remains open.”
2. Stemming the democratic tide
While the Arab world enjoys a spring, a deep chill has settled over the post-Soviet states. After a burst of pro-Western sentiment during revolutions in Georgia (2003), Ukraine (2004) and Kyrgyzstan (2005), Moscow has re-asserted its influence in the latter two countries and punished the first of the group with a humiliating war. Recent meetings of the Collective Security Treaty Organization, the so-called “NATO of the East,” have focused on hardening authoritarian regimes against possible revolutions. The international NGOs that played a role in opening up former Soviet states now find themselves working under intense scrutiny.
3. Winning the pipeline race
Russia’s financial clout, at a time of European weakness, could make it difficult for the EU to forge its own path to energy security. The EU wants to break Russia’s choke hold on gas exports from Central Asia, which currently leaves Europe vulnerable to Moscow’s prices and whims. But no route has yet been selected for the Southern Gas Corridor, with no fewer than four options under discussion. Meanwhile, some of Europe’s biggest energy firms have been persuaded by Russian giant OAO Gazprom to formally support a rival pipeline, South Stream, which would reinforce Moscow’s dominance of the market. The Russian project appears to enjoy backing from Moscow, while the Europeans are limited to a profit-driven construction schedule.
4. Escalating the standoff in Georgia
Three years after its brief war with Georgia, Moscow shows no signs of honouring a ceasefire deal that promised troop withdrawals from the breakaway states of Abkhazia and South Ossetia, and Europe seems reluctant to challenge Russia on this front. To explain the lack of European response to Russia’s behaviour, a recent report by the International Crisis Group quoted an unnamed EU official expressing a desire to avoid insulting the more powerful country: “There is no dilemma when it comes to choosing between Russia and Georgia.”
5. Delaying WTO accession
Outgoing president Dmitry Medvedev pushed for Russia to join the World Trade Organization after 18 years of negotiation. The United States seems almost as eager, and some reports speculate it could happen within months. Mr. Putin has never been so enthusiastic, however, and his plan to integrate post-Soviet economies would complicate international trade issues. Konstantin von Eggert, a prominent Russian journalist, expressed skepticism about a quick WTO deal: “It looks for now as if things are probably not moving forward or at least, not moving forward fast enough,” he wrote in a commentary for the state-owned news agency RIA Novosti.
Prime Minister Tigran Sarkisian backed on Wednesday Russian leader Vladimir Putin’s calls for the creation of a “Eurasian Union” of former Soviet republics one month after pledging to speed up Armenia’s European integration. Putin floated the idea in a newspaper article published earlier this month and widely linked with his plans to regain the Russian presidency next year. He said the new union would build on Russia’s existing Customs Union with Belarus and Kazakhstan, which plans to remove all barriers to trade, capital, and labor movement next year.
Sarkisian said Armenia “positively views” Putin’s proposal as he spoke at the Saint Petersburg State University of Economics and Finance on a visit to Russia’s second largest city. “It is promising and modern,” the Armenian government’s press office quoted him as telling university students. Sarkisian, who has limited say on Armenian foreign policy, did not specify if Yerevan is ready to join the Eurasian Union. Neither President Serzh Sarkisian (no relation) nor the Armenian Foreign Ministry has commented on the issue yet.
While maintaining close political, security and economic ties with Russia, the Armenian government has declared deeper integration into the European Union a top foreign policy priority. Yerevan is increasingly involved in the EU’s Eastern Partnership program that offers six ex-Soviet states the prospect of privileged partnership with the bloc. As recently as on September 19 Tigran Sarkisian presented the EU’s executive European Commission with a new plan of economic and political reforms promised by his government. He expressed hope that they will allow Armenia to deepen ties with the EU “at a faster pace.”
Sarkisian likewise pledged to carry out reforms that would put his country firmly on “the European path of development” during his previous visit to Brussels last March. The Armenian premier visited the Russian university, where he studied in the 1980s, the day after signing in Saint Petersburg a free-trade agreement with Putin and the prime ministers of Ukraine, Belarus, Kazakhstan, Kyrgyzstan, Moldova and Tajikistan.
News reports said that the agreement, subject to parliamentary ratification, would exempt only some goods from import duties. Putin and his ex-Soviet counterparts did not identify those goods at a news conference held after the signing ceremony. Putin said only that the deal will boost commerce and “make our economies more competitive.” “This document signed by us will give new impetus to integration processes and further economic growth in our countries,” Sarkisian said for his part.
Unlike most of the signatories to the free trade deal, including Armenia, Russia is not a member of the World Trade Organization (WTO). This might potentially put them at odds with WTO rules. It also remains to be seen if the deal will complicate negotiations between the EU and Ukraine, Moldova and Armenia on a “deep and comprehensive free trade area,” or DCFTA, which is envisaged by the Eastern Partnership. Some EU officials say DCFTA is not compatible with membership in the Russian-led Customs Union.
Putin said in his October 6 article the Customs Union will soon expand to take in Kyrgyzstan and Tajikistan. Successive Armenian governments have declined to join the union on the grounds that Armenia has no common border with any of those countries. This is also the official reason why Yerevan has only an observer status in the Eurasian Economic Community (Eurasec), a more loose grouping of Russia and the four other former Soviet republics. Incidentally, Sarkisian attended on Wednesday a separate Eurasec summit also held in Saint Petersburg.
Sarkisian held separate talks with Putin on Tuesday. They reportedly focused on Russian-Armenian economic ties. An Armenian government statement quoted Putin as expressing his satisfaction with their current state and emphasizing the fact that Russia has been Armenia’s leading foreign investor.
Sargsyan said that the signed document is historic, adding that “an exclusive opportunity will be created for Armenia’s economy and economic entities.” “Firstly, without customs duties we will have an opportunity to increase trade turnover between the member states that signed the agreement. Secondly, common rules for licensing, coding, and some others included in the document will be created. Thanks to this agreement, not a single country can impose unilateral restrictions on economic entities of other countries,” Prime Minister Sargsyan stated.
Sargsyan reported that the new document will decrease more than 600 restrictions included in previous bilateral agreements. “More than favorable conditions will be created for our economic entities for selling goods and securing services in that united economic territory. I am sure that this is an additional stimulus for the development of our economic capacities,” Sargsyan said.
Edward Kirakosyan, Executive Director, Union of Manufacturers and Businessmen of Armenia, stated that the document is positive in terms of business, adding that the signing of the document will result in an increase in export volumes. “Even if the demands concerning the united licensing and coding, included in the document, create some difficulties for our businessmen in the beginning, later the free economic zone will bring only positive results,” Kirakosyan told ArmeniaNow.
Welcoming PM Tigran Sargsyan, Vladimir Putin said: “I should note that we have quite good dynamics of economic ties. Russian investments have been growing in Armenia’s economy to reach the mark of $3bn. We are currently working to improve Armenia’s transport system. The Russian side has assumed the concession of railway management, with 5 billion ruble-worth investments made to upgrade your country’s railway network.” “I understand that a strategic program is out for the Armenian Railway, ushering in a new stage of development activities. As you may know, the Upper Lars border point has been opened recently at the request of the Armenian side to improve inland communications between our two countries. We are likewise well aware that the North-South Highway is under construction in Armenia the economic aspect of which has to be looked at yet. I would like to stress that we boast good relationship in power engineering as well and in nuclear energy, in particular. Gazprom has already invested USD 1.6bn in Armenia’s power network. There is no doubt that our joint efforts will be a full success. I am pleased with this meeting which is sure to further boost bilateral relations,” Putin said.
Thanking his Russian counterpart for kind remarks, the head of the Armenian government stated, in turn: “Our country’s economy has been on the upgrade for the last two years following the global financial and economic crisis. 2% growth was stated in Armenia last year, and it is expected to rise to nearly 5% this year. Armenian-Russian relations have good dynamics of development. Russian companies feel safe in Armenia. Over 1200 Russian companies are currently operational in our country with a satisfactory development outlook. The export potential of Armenia-based Russian companies is up. The investments made by those entities with sizeable Russian equity boast a high level of profitability. I wish to underscore that our joint efforts keep going quite successfully with no programs failed so far. I would like to especially thank the Russian partners for providing a USD 500mn worth stabilization loan in 2009, which helped us cope with the negative impact of the global crisis. 250 million was used to build housing in the earthquake zone.
On the one hand, it promoted economic growth in our country since part of the proceeds targeted construction and, on the other hand, it took up a social bias allowing people to move from temporary shelters into comfortable apartments. The balance of 250 million was used for crediting the home economy including the companies in difficulty.”
This proposal was made by Putin in an article that he had written for the Russian newspaper “Izvestia”. According to him, the Customs Union and Common Economic Space will serve as a base for the creation of a Eurasian Union. The reaction of post-Soviet countries is still unknown, but it is clear that many leaders will try to exploit the situation in a bid to get some privileges and concessions from both Moscow and Brussels. Ukrainian President Viktor Yanukovych threatened to expel the Russian Black Sea Fleet and to host NATO’s missile defense system instead unless Russia stops forcing it into joining the Customs Union.
Azerbaijan will refuse to further extend Russia’s lease on the Gabala radar station and will join the Nabucco gas pipeline project if Moscow fails to put forward soon new proposals to resolve the Nagorno-Karabakh conflict, said a diplomatic source in Baku. Georgia continues to use its veto right to block Russia’s entry into the World Trade Organization and demanding that it makes concessions in the form of the establishment of a Georgian monitoring at the Abkhazia and South Ossetia borders. Tajikistan is also going to raise the rent for the Russian military base.
And only Armenia does not advance any claims to Russia and does not require a payment for the deployment of the Russian military base. It is true that recently Armenia has made an unprecedented step of inviting foreign investors to invest in energy and transport network in Armenia. Currently, these networks are virtually a monopoly of Russian companies, and an invitation to foreign investors can diversify the economy of Armenia.
But the real competition between the West and Russia will take place in the fuel sector. After nine years of planning, the Nabucco gas pipeline consortium has submitted an application for exporting Azerbaijani gas. But British Petroleum, the chief Western company in the Caspian region, announced its version of the pipeline, which it called more economically and politically reliable. Earlier, the European Union supported the construction of the Southern Corridor, which aims at increasing the degree of energy security in Europe by opening the route, which will make it possible to supply natural gas from the Caspian region, bypassing Russia.
Moscow is trying to increase its influence through the newly constructed gas pipeline across the Baltic Sea, as well as through the planned “South Stream” in the Black Sea. In his speech at the Eastern Partnership summit Armenian President Serzh Sargsyan called for choosing a route that would not isolate Armenia while also enriching Azerbaijan even more, as it is feared that Azerbaijan may use its accumulated wealth to finance a new war in Nagorno-Karabakh. “It is not excluded that Putin will use his power and authority to become the Caucasus Charles de Gaulle, promising his little southern neighbors a great strategic reconciliation on the part of Russia,” said Carnegie Endowment expert Thomas de Waal.
Most former Soviet republics have signed a free-trade agreement that looks to increase mutual trade, especially between Russia and Ukraine, by removing some import and export duties. Eight members of the Commonwealth of Independent States, a loose group of 11 former Soviet republics, agreed to the deal at the meeting of their prime ministers in St. Petersburg that ended late Tuesday.
Ukraine has backed the pact, pulling it closer to Russia, after fraying ties with the European Union by prosecuting former Prime Minister Yulia Tymoshenko, a political rival of its President Viktor Yanukovych. "We are mutually opening the markets for our goods," Prime Minister Vladimir Putin said. "It means that goods will come to our markets at lower prices. "This, in turn, means easier conditions for creating new cooperating enterprises. All this, no doubt … increases the competitiveness of our economies."
The members of the free-trade space are not planning to publish the full agreement or specify what goods will enjoy exemptions from duties "as yet," Putin's spokesman Dmitry Peskov said Wednesday. But the prime ministers broadly agreed on the goods, he said. The other signatories of the free-trade deal include Belarus and Kazakhstan, which had already joined a customs union with Russia, a tighter group with no customs clearance at their internal borders. Armenia, Moldova, Kyrgyzstan and Tajikistan comprise the rest of the new free-trade bloc that could start functioning next year, if ratified by the parliaments of the eight countries.
While total trade among the commonwealth members reached $134 billion in the first half of this year, business between Russia and the rest of the group accounts for almost half of that number. Of the $60 billion in trade between Russia and the other 10 commonwealth members, $25 billion worth of goods traveled between Russia and Ukraine, according to the Federal Customs Service. Russia and Ukraine are the main beneficiaries of the free-trade deal, said Volodymyr Fesenko, director of the Kiev think tank Penta. Ukraine pushed the hardest of all the signatories for the agreement, he said.
For Kiev, improving economic ties both with the European Union and Russia was an alluring goal, he said. Now that Kiev received a battering at the hands of the EU and other Western governments for its treatment of Tymoshenko, Russia is making a show of being an accomodating partner, Fesenko said. "There's a contrast effect to Ukraine's relations with the European Union," he said. Russia's longer-term goal remains to convince Ukraine to join the customs union, a prospect that Ukraine insisted would contradict its obligations as member of the World Trade Organization, the global trade arbiter, Fesenko said.
Ukraine's Prime Minister Mykola Azarov, however, said Wednesday that he ordered the government to consider the possibility of observing the technical standards of the customs union. Vladimir Zharikhin, deputy director of the CIS Institute, a think tank that studies the commonwealth, described the free-trade zone as an "anteroom" for the customs union. The free-trade agreement complies with WTO rules, Putin said. In addition to Ukraine, the other WTO members of the free-trade agreement are Moldova, Kyrgyzstan and Armenia.
Azarov said Tuesday that the agreement stipulates a time frame to remove all import and export duties within the free-trade space over time. Azerbaijan, Turkmenistan and Uzbekistan will consider joining the free-trade agreement before the end of the year, Putin said.The Eurasian Economic Community is considering releasing a second $445 million tranche of a $3 billion bailout loan for Belarus, Prime Minister Vladimir Putin said, urging Belarus to comply with the terms of the loan program, Interfax reported. Belarus has already received a $800 million tranche of the loan, which comes from the EurAsEC Anti-Crisis Fund. "I would like to draw your attention to the fact that the terms of the loan, which have been agreed on with the Belarussian side, should be complied with," Putin said at a prime ministerial meeting of the EurAsEC Interstate Council. "This is not easy, but they [the terms] have to be complied with to ensure effective use of these resources." Belarussian Prime Minister Mikhail Myasnikovich said: "everything will be complied with in accordance with the algorithm that has been agreed on."
Russia spent £470m on foreign aid last year, the lowest of all the G8 nations. But its status as a 're-emerging donor' reveals its desire to maintain influence and rebuild its public image
Russia spent $472.32m on foreign aid in 2010, according to the Russian ministry of finance's report released in advance of this week's G8 summit in Deauville, France. The country's aid spending, according to the report, dropped from $785m in 2009 to $472.32m in 2010 – a decrease of 40%. However, Russia had only temporarily increased its aid budget in 2009 to soften the blow of the global financial and economic crises, particularly in the neighbouring former Soviet republics, the report says.
Though Russia has the smallest aid budget of the G8 bloc, it is often called a "re-emerging" donor. The Soviet Union provided massive amounts of aid for several decades during the Cold War – some $26bn in 1986 alone – but Russia became a net recipient of assistance in the 1990s after the fall of communism. Until last year, Russia was a recipient of UK aid.
A Russian government strategy paper, from 2007, about foreign aid policy set an annual spending target of $400-500m and talked about setting up a specialised government aid agency. "Present-day realities of global policy and economy and Russia's status of a superpower suggest that Russia could pursue a more active policy in international development assistance, including an increase in government spending for these purposes," it said. Emerging market rival Brazil already has its own aid agency and South Africa launches its development partnership agency this year.
Priorities for Russian overseas aid last year included food security and health programmes, with $98.2m for agricultural training and technology in African countries, and more than $80m on global health programmes in developing nations.
Unlike aid from many of the other large economies, most Russian development assistance is channeled through multilateral organisations, including the World Bank, the UN, and global initiatives to stimulate industry investment for vaccine research and development. More than 60% of Russian aid for global food security initiatives last year was channelled through multilateral organisations.
Russia has been up-front about the role it hopes its aid budget will play in maintaining its regional influence and rebuilding its public image. However, Andrei Bokarev, the head of international financial relations at the Finance Ministry, said in January that the government needs to do more to publicise Russia's aid programme because it doesn't get enough media coverage.
But as other G8 countries, including the US and Britain, struggle to make the case for development aid to a domestic public increasingly affected by budget cuts, Russia is experiencing its own special challenges, with one in eight Russians living below the official poverty line and millions unemployed.
"Russia is becoming a major provider of development assistance for low-income countries in the region," says the World Bank. "Yet development also remains a domestic imperative." In 2008, official poverty rates ranged from 38% in Kalmykia (in the south) to 7.4% in oil-rich Khanty-Mansiysk.
Despite the domestic problems, Russia has said the role of its foreign aid is to "strengthen the credibility of Russia and promote an unbiased attitude to the Russian Federation in the international community". A more consistent policy on international development would help strengthen its international position, said its 2007 strategy paper, and could spur Russia's domestic development by promoting trade and economic cooperation with countries that receive Russian aid. And, it added, a strong development policy could promote a "belt of good neighbourliness" along Russian borders and help address issues from drug trafficking to cross-border crime.
In response to the global financial and economic crises, Russia backed the creation of a multi-billion dollar crisis response fund to help struggling neighbours. Through the fund, Russia gave Tajikistan a $63m grant last year. And between 2006 and 2009, Russia put together a multi-million dollar package to develop health systems in neighbouring republics, in response to the threat of an influenza pandemic. More than 40 laboratory facilities in the region were re-fitted and upgraded, and 200 specialists were trained on influenza surveillance and response.
Last week, leading development charities accused the G8 of "cooking the books" in its annual accountability report, released in advance of the Deauville summit. The charities said the report covered up broken promises to the world's poor by ignoring the impact of inflation. But unlike other members of the G8 – the US, Britain, France, Germany, Japan, Italy and Canada – Russia did not make specific commitments for aid to Africa at the 2005 Gleneagles summit and does not submit its aid figures to the OECD, which monitors progress on aid pledges.
In 2007, Russia committed to the UN aid spending target of 0.7% of gross national income (GNI), though set no specific timeframe for meeting the target. If it had met the 0.7% target in 2009, Russia would have been the world's 6th largest aid donor, with a budget of $9.27bn.
Eurossiya: genesis of an empire from the Atlantic to the Pacific
“We propose the creation of a harmonious economic community stretching from Lisbon to Vladivostok.” With these words, Russian Prime Minister Vladimir Putin described last year his vision of “a unified continental market with a capacity worth trillions of euros.” Putin’s proposal came during a visit to Germany, where the Russian leader had also a meeting with German Chancellor Angela Merkel.
Putin Pitches Russia to CEOs
Prime Minister Vladimir Putin touted the attractiveness of investing in Russia to an audience of global chief executives Monday, boasting that he knew "the majority of you are planning to continue to boost your participation in the Russian market." Mr. Putin's upbeat message came as long-term investment in Russia has shown signs of picking up slightly from the lows hit in the wake of the financial crisis. Foreign direct investment, at about $7 billion in the first half of the year, is still far below the pace of 2007 and 2008, when it came in at nearly twice the speed, according to the Federal Statistics Service. Still, many big companies are boosting investment in spending in Russia. Germany's Siemens AG on Monday pledged €1 billion ($1.37 billion) for gas and wind turbines, trains and other equipment.
"All planned projects for modernizing the economy, for raising the effectiveness of government institutes: This is one of the priorities of our work—all these tasks will be carried out one after another, without question," Mr. Putin said.
His audience included international corporate chiefs of Alcoa Inc., Nestle S.A. and PepsiCo. He appeared attentive to executives' remarks in a panel session, making notes to himself and responding to comments in detail. He began his talk with the group, the Foreign Investment Advisory Council, about 50 minutes late—an improvement over earlier this month when he appeared at a meeting with portfolio investors more than two hours behind schedule.
Strategic investors such as BP PLC have faced setbacks at the hands of the Kremlin and the country's billionaire tycoons, with apparently little recourse in the courtsystem, widely seen as corrupt. But in public forums, international executives have shied from strong criticism of Mr. Putin, who announced last month he plans to re-ascend to the presidency next year, cementing his formal control over the country for at least six years. In a separate interview with the heads of state-run television channels Monday, Mr. Putin praised himself as the "most hardworking" Russian leader since World War II.
James Turley, chairman and global CEO of Ernst and Young, told Mr. Putin the investment council supported his return to the presidency, though members would regret his departure from the prime minister's job. Mr. Turley, who is co-chairman of the investment council, said members would work with the next prime minister to "improve the investment climate." Other executives mainly criticized minor points of Russia's laws and bureaucracy and praised the government for some recent reforms. In Russia, businesses complain most about corruption, law-enforcement issues and problems obtaining adequate telecommunications and electricity links, said Thomos Mirow, the president of the European Bank for Reconstruction and Development.
Nestle Chief Executive Paul Bulcke, who is overseeing expansion in southern Russia this week, hailed the high levels of access granted in Russia compared with other top emerging markets, such as Brazil, India and China. "You can speak to two ministers at the same time," Mr. Bulcke said in an interview, gesturing toward Russian officials at a reception after the council meeting. Another advantage in Russia is consistency, Bulcke said. BP Chief Executive Bob Dudley said he is "rock steady" in his commitment to joint venture TNK-BP Ltd., where Soviet billionaire partners have clashed with the UK oil giant, battering its share price.
Business leaders pointed toward continued positive economic growth at a time when some developed economies are grinding to a halt and even China is exhibiting slowing growth and barriers to business. Mr. Putin said inflation is coming down and that Russia will work toward a balanced budget, keeping government debt at current low levels and aiming for gross domestic product growth of 4% or more this year. "How many countries do you have where the growth is going to vary between 4% and 5%?" Alcoa Chief Executive Klaus Kleinfeld said in an interview. "Certainly a lot of things have developed toward the positive." Global companies spooked by Russia's 7.9% economic contraction in 2009 may now be coming back to invest. Coca-Cola Co. and its bottling partner Coca-Cola Hellenic Bottling Co. SA last month said they would invest $3 billion in the next five years to expand in Russia.
PepsiCo, which, which last month said it completed the acquisition of Russian dairy producer OAO Wimm-Bill-Dann, is planning to put $1 billion into Russia over the next two years, bringing its 10-year total to $10 billion. Russia is now PepsiCo's biggest market after the U.S. "Surprisingly, we view Russia's volatility as less than other emerging markets," Chief Executive Indra Nooyi said Monday, adding that she met with Mr. Putin before the acquisition and sees the government as "friendly." "The politics of Russia is not what worries us. We worry about whether the leaders are friendly toward investment," she said. "Over the last few decades, the leadership has been very friendly to PepsiCo."Source: http://online.wsj.com/article/SB10001424052970204479504576637351593119480.html
N-Trans, which runs the VSC container terminal in Vostochny through its Global Ports Investments Plc unit, aims to steal time-sensitive, high-value shipments away from maritime routes using the 6,000-mile trans-Siberian railway. Journey times of about 11 days compare with a month for sea transfers from Korea and Japan to Hamburg and as many as 40 days to St. Petersburg, where congested infrastructure can stretch times further.
“The volumes you can carry by train are obviously much lower than on the smallest container ships, and one of the drivers for the trans-Siberian venture is as a solution to the congestion in St. Petersburg and the Russian ports,” said Marc Pauchet, an analyst at Maritime Strategies International Ltd.
Globaltrans rose 7.7 percent, the most in six weeks, in London today and was priced 3.3 percent higher at $14.15 as of 11:30 a.m. local time. The stock has advanced 7.2 percent since first trading in the U.K. on May 1, 2008, valuing the company at $2.17 billion even after a 14 percent slump on Aug. 8 as global markets fell on concern about the euro and U.S. debt ratings. The business almost doubled profit before minority interests to $226 million last year on sales of $1.38 billion.
Globaltrans’s seven time-zone trans-Siberian service remains a fledgling one, utilizing just 450 box wagons, compared with the company’s 30,000 gondola cars used for bulk transport and 21,000 oil tanks. Customers include Hyundai, for which the company ships parts to a Russian factory that opened last September and is increasing output of the Accent model to 200,000 cars a year.
“It will provide a good service for certain kinds of cargo, but in terms of the volumes it’s just not there yet,” said Fred Doll, managing director of the Forrest Row, England- based Doll Shipping Consultancy and a former director at Clarkson Plc, the world’s biggest shipbroker.
Still, growth rates for container volumes at Russia’s ports suggest potential for a step change, according to Nikita Mishin, the joint owner and co-founder of N-Trans, who said in an interview that the box market is booming and the trans-Siberian route underutilized. Russia last year had a throughput of 4.1 million 20-foot equivalent units, or TEUs, as standard containers are known, according to Drewry Maritime Advisors, with volumes forecast to increase to 13.1 million by 2020. The market expanded at 3.9 times the pace of the Russian economy in the decade to 2010.
While St. Petersburg, Russia’s biggest port, ranked 62nd in the world in 2010 with 1.9 million TEUs, that equaled growth of 44 percent, according to Drewry, outstripping expansion at the world’s top 10 harbors. Among Europe’s top three, volumes grew 14 percent in Rotterdam and Hamburg and 16 percent in Antwerp. Inward container flows to Russia are dominated by consumer goods, foodstuffs and spare parts, N-Trans says, with outbound traffic including exports from OAO Severstal, the country’s second-biggest steelmaker, which is using containers after a two-year Globaltrans campaign to win the business.
Box volumes have recovered from the recession, surpassing peak 2008 levels by the first quarter of last year. Still, Russia’s road and rail infrastructure -- the country has a limited freeway network and its 53,000-miles of track still uses shunting yards -- requires upgrading if containerization is to penetrate far beyond the ports, according to N-trans. Volume growth is starting from a low base, Drewry figures show. Container throughout in Russia stands at about 29 TEUs per 1,000 people, compared with 132 in the U.S. and 168 in the European Union. Even at forecast growth rates the ration will remain below 100 at the end of the decade, the projections say.
Global Ports opened its first inland site, Yanino, in 2009, 50 miles from St. Petersburg, helping to bypass congestion in Russia’s second-biggest city which MSI’s Pauchet says can be “atrocious” as inadequate road links combine with insufficient storage space in a “vicious circle” of backed up containers. Yanino can handle 200,000 TEUs a year and covers 51 hectares, with the same space again available for expansion.
The VSC or Vostochnaya Stevedoring Co. terminal at Vostochny port in the city of Nakhodka has direct access to the trans-Siberian railway, with 85 percent of cargo using the site moved by train. The terminal, 25 percent owned by Dubai-based DP World Ltd., the third-largest port operator, is the biggest in Russia’s Far East, with an annual capacity of 550,000 TEUs.
One of the primary attractions of the overland route is as a mechanism for returning empty containers from Europe to East Asia, said Pauchet, who previously worked at Hyundai and DHL Global Forwarding. Because of the balance of trade, companies can’t fill all east-bound boxes, and sending them by rail may be preferable to loading ships full of non-revenue-earning cargo.
Global Ports, Russia’s No. 1 container-terminal operator by throughput with a 30 percent market share in the first four months of 2011, also counts Korea’s Kia Motors Corp. among its customers, and there may be scope for further parts flows to switch to rail, Mishin said. The ports unit competes with Moscow-listed Fesco Transport Group, known as Far East Shipping Co. and based in Vladivostok, 70 miles from Vostochny, OAO Novorossiysk Commercial Seaport or NCSP, which is based in Novorossiysk on the Black Sea and trades in London, and National Container Co. or NCC, the operator of St. Petersburg’s biggest container terminal.
Global Ports, which also handles more than one-quarter of fuel exports from Russia, raised $534 million in an initial public offering of global depositary receipts in London on June 24 and was 1.7 percent higher today for a market value of $2.39 billion. That compares with $1.66 billion for NCSP, which was down 3.7 percent after reporting seven-month cargo volumes fell 1.6 percent even as container traffic rose 51 percent. The sale was the third in as many years by N-Trans owners Mishin, Konstantin Nikolaev and Andrey Filatov after Globaltrans and infrastructure unit OAO Mostotrest, which floated in 2010.
Globaltrans is interested in acquiring stakes in state- owned OAO Russian Railways divisions OAO TransContainer and OAO Freight One, VTB Capital said in a note last month. Following the unit disposals Russian Railways may consider a share sale from 2012 to raise funds for work including better port access, it said last year, when valuing itself at “several times” authorized capital of 1.5 trillion rubles ($48 billion).Source: http://www.businessweek.com/news/2011-08-12/siberian-rail-link-speeds-asia-europe-trade-freight-markets.html
The three-day conference, held in the eastern city of Yakutsk, brought delegates from the U.S., China and Britain and was aimed at capturing the economic potential of the resource-rich region. Mr Levinthal told The Times: 'We should see advanced development of road and rail infrastructure here [in the Russian Far East] and improvement in the investment climate in Russia as a key aim.'
A 500-mile railway line stemming from the existing Trans-Siberian line to Yakutsk - costing £900million and due for completion in 2013 - is part of Kremlin plans to extend rail lines 2,360 miles to the north-eastern tip of Siberia by 2030. That could open up the way for the construction of a tunnel - which could take up to another 15 years to complete. The route would be twice the length of the Channel Tunnel, in a sparsely populated area miles from large population centres.
It would also require U.S. engineers to create through train lines in Alaska, linking it with cities in Canada and onwards. Currently, travellers would have to get a ferry to Anchorage, Alaska, from the U.S. west coast and train services in Russia would only take you as far as Chita or Vladivostock, before they move down into China and Mongolia. It remains to be seen whether Russia could finance such an ambitious project, but it opens up the possibility of a breathtaking train journey through picturesque Siberia and Alaska.
The new highway—the M58 Amur Highway—It is scheduled to be completed in 2016 and it will be a key part of what is probably the longest highway in the world: the Trans-Siberian Highway. When all of the segments are finished, the Trans-Siberian Highway will stretch 6,835 miles (11,000 km) from Saint Petersburg on the Baltic Sea of the Atlantic Ocean in Northwest Russia to Vladivostok on the Japan Sea of the Pacific Ocean in Southeast Russia. Compare that with the longest highway in the United States—Interstate 90— which goes from Boston, Massachusetts to Seattle, Washington: Interstate 90 has a total of only 3,099 miles (4,987 km).
Although the M58 Amur Highway between Chita and Khabarovsk makes up only about 20 percent of the total distance of the Trans-Siberian Highway, it is still thought to offer perhaps the most demanding challenges for those who are building it. The route follows a gravel trail called the Amur Cart Road that was built between 1898 and 1909. In recent years, it has been used primarily as a logging road. When finished, the new highway will be two lanes wide in most areas, although it will be four lanes wide in others. The entire highway will be paved with asphalt.
In order to produce the asphalt mixes that are necessary for this project, the Kamdorstroy Trust of the Republic of Tartarstan bought an Astec Double Barrel® M-Pack plant. Kamdorstroy Trust is one of the most experienced companies in the growing road-construction industry of Russia.
The Astec Double Barrel M-Pack plant was shipped from the United States across the Atlantic Ocean to Saint Petersburg, Russia and was then transported by train more than 3,000 miles (4,800 km) to the location of its first jobsite on the M58 Amur Highway. The relocatable plant was set up and became fully operational in early summer of last year.
The central part of Kamdorstroy Trust's new plant is a 6 x 33-ft. (1.8 x 10-m) Double Barrel drum mixer equipped with a Whisper Jet® oil burner. The drum mixer also has the Double Barrel Green™ System that permits production of warm-mix asphalt (WMA) as well as hot-mix asphalt (HMA).
Other portable components include a five-compartment cold-feed system; scalping screen, conveyors; weigh bridge; baghouse; a split dry-additive silo that can accommodate the storage and delivery of both dust and filler; a portable Heatec asphalt storage tank capable of storing and heating 15,000 gal. (56,780 L); and an Astec New Generation storage system that consists of two 100- ton (91-tonne) storage silos with electrically heated cones.
When the production team's Astec Double Barrel M-Pack plant is operating under optimum conditions, it is capable of producing mix at the rate of 180 tons per hour (163 tonnes per hour).
The plant operator can visually monitor all operations in the plant from the observer control center that is about 10-ft. (3-m) square in size. The center includes Astec's PMII-A continuous mix blending controls that allow the operator to monitor the proportional control of the aggregate feeders and the blending of asphalt and additives. Everyone in Russia is interested in the progress of this construction project. When construction of the M58 Amur Highway is completed, it will permit travel and trucking in parts of Siberia that have been almost inaccessible.
Alpine resorts such as Courchevel are a magnet for fur-hatted men and women in Chanel ski suits, its pistes signposted in Cyrillic script and its boutiques offering wealthy oligarchs must-have diamond-encrusted skis. But now an ambitious consortium of developers is hoping to lure Russian and European skiers to a new winter playground – far from the softly twinkling lights of traditional Alpine villages. They are to construct a cluster of five ski resorts in the war-torn North Caucasus, stretching across southern Russia from the Black Sea in the west to the Caspian Sea in the east, and challenging the widely-held belief that the area is dangerous and out of bounds. The planners also want to upgrade Mineralnye Vody airport for international flights, putting it within four hours' flying time of Britain.
The five resorts – Lagonaki, Arkhyz, Mount Elbrus, Mamison and Matlas – will be strung out across a mountain range which has seen fierce fighting with Georgia, given refuge to Islamic militants, and been plagued by regular kidnappings, bombings and murders. Yet this week in the picture-postcard Swiss ski resort of Davos, Russian President Dmitry Medvedev will formally unveil the plan for the network of ski resorts, named Peak 5642 after Mt Elbrus, the highest mountain in the Caucasus at 18,442ft (5,642 metres) – some 2,660 higher than Alps' Mont Blanc.
Supporters of the project say that the beauty of the region and the quality of its snow is undisputed, and believe its ski slopes could rival those of the Alps. The area benefits from longer winters than the rest of Europe, and its scope for high-altitude glacier skiing will further prolong the season. It can boast pristine peaks and hundreds of miles of virgin powder, where adventure travel companies currently offer heli-skiing trips. But those who organise such tours to the region are sceptical about the potential for mass tourism.
Gia Ksnelashvili, the Caucasus mountain guide for a St Petersburg travel company, said that while the Mt Elbrus area was safe for tourists, he would not at present take groups to the other areas.
"I wouldn't say Dagestan is the best place right now," he said. "There is no infrastructure at all, no hotels, and it's not safe. While Elbrus is well known to climbers and tourists, other regions do not have that safe reputation. It will take a lot of advertising to convince people to go there." James Morland, owner of heli-skiing tour operator Elemental Adventure, said: "It's an extremely bold plan, and sounds unbelievably ambitious. Advice about travel to the region is often overly cautious, but it's a tough place – certainly no Courchevel.
"It has amazing potential, but if I was a Western investor I'd certainly not be risking my money in building there."
The Northern Caucasus Resorts company – the state enterprise in charge of implementing the project – claims that Peak 5642 will attract a wide range of skiers, from beginners to experts. It also promises that Russia's complex visa procedures will be streamlined to make it easier for European skiers. Juri Karpenko, the company's deputy director general, says that while it may be a struggle to convince Russia's wealthiest oligarchs to abandon the Alps, it should be possible to attract new skiers from the country's 140 million population – only 2 per cent of whom currently ski, as well as other Europeans.
Under the plan, the first skiers will take to the pistes in the resort of Arkhyz in March next year, although it will not be fully open until 2014. Arkhyz will be the biggest of the five resorts, with 270km of pistes spread over three villages – more than Courchevel's 150km of runs. And he dismisses concern over security, saying that the Islamic militant strongholds of Chechnya and Ingushetia may later join the scheme.
"Chechnya at the moment is one of the most secure regions in the area. They have great order there," he told The Daily Telegraph during the London leg of a Europe-wide promotional tour. "Actually it's very safe in the area, and I've never felt unsafe. Neither have our international partners, and climbers come to Elbrus from all over the world. It's an image issue. But we have all the information and tools to fight this."
He faces an uphill struggle, however. Last week two policemen were shot dead in the region designated for the resort of Mamison. The Foreign Office warns against all travel to Dagestan (where the resort of Matlas is located), and all but essential travel to an area that includes three of the four remaining resorts. "Terrorism and kidnapping in these regions remain a serious risk," says the Foreign Office website. Mr Karpenko refuses to be discouraged. He cites the example of Tel Aviv, where people have learnt to survive in a tense area, and says that the government will protect the tourists, even if that means deploying metal detectors on ski lifts and fencing off the resorts.
"If the situation looks like it is necessary to take those actions, then we will do that. Clearly at the moment there is no need for bigger protection."
The team behind the Peak 5642 project is led by Akhmed Bilalov, a Dagestani Muslim who plans also to market the resort to the Middle East, North Africa and other Arab-speaking countries. Flying times from the Middle East are several hours shorter than to the Alps, and four of the five areas are Muslim republics. Matlas in Dagestan already has a mosque in the heart of the proposed area.
"It's really comfortable for a Muslim person who has money to travel to a resort that has a mosque," he explained. "He'll feel at home. "Religion is important to the local people and they are proud of that. No one is taking it away from that. "It's not a ski resort only for Muslims. And as for drinking and things, in my opinion, they enjoy the après-ski as well as everyone else. They don't feel separate even if they are not drinking in the bars."
Right now most of the proposed resorts boast little more than a cluster of farmhouses, where impoverished Russians eke out a meagre living through farming. The locals may be swathed in fur and shawls, but they haven't been purchased in Bond Street, and skiing involves a lung-bursting hike up the mountain rather than a glide in a heated gondola. "Scepticism exists, and it also exists in Russia," admits Mr Karpenko. "But take your guide, go to the area, spend two to three days, and your attitude will change.
"After you have met the people, they will take you to their homes and give you nice food. You'll feel their hospitality, and the warmth of their hearts. You close your eyes, open them again, and see the beautiful nature all around you. Then you'll forget the news."
Russia is ready to invest “hundreds of millions of dollars” to join high-voltage power line and gas pipeline projects in Central Asia, President Dmitry Medvedev said in the Tajik capital of Dushanbe. Pakistan, Afghanistan and Tajikistan “welcome Russia’s interest” in a gas pipeline project across the countries to India, according to a joint statement signed by Medvedev and the countries’ leaders in Dushanbe. The statement also called for accelerated construction of the CASA-1000 power project.
Afghan President Hamid Karzai’s government is seeking to develop the country as a bridge for energy supplies from Central Asia’s hydro-electrical and gas resources to the economies of Pakistan and India. The U.S. has supported the efforts, seeking to stabilize the country before pulling out its major combat forces, a step it plans for 2014. Tajikistan seeks to export electricity to Afghanistan through a 220-kilovolt power line that will form the backbone of the CASA-1000 project. Afghan officials have said the line will be extended to Pakistan, whose 180 million people face electricity shortages of 3 to 4 gigawatts per day, leading to blackouts that have lasted for 12 hours in cities, sparking protests and riots.
“Tajikistan’s competitive advantage is hydropower,” said Pakistani Foreign Minister Hina Rabbani Khar. “Through CASA- 1000 you are letting Tajikistan use this competitive advantage. This is a good thing.”
In December, Karzai, Pakistani President Asif Ali Zardari and officials from India and Turkmenistan signed an agreement to build a 1,700-kilometer (1,050-mile) gas pipeline from Turkmenistan’s gas fields to India. The TAPI project faces war zones and insurgency along the route through Afghanistan and Pakistan. Russian Deputy Prime Minister Igor Sechin told reporters in October that the country’s gas export monopoly, OAO Gazprom, might join the TAPI venture. Turkmenistan’s Foreign Ministry at the time accused Russia of interfering in the country’s attempt to develop international energy ties and said it had no agreement with Russia about the pipeline. Medvedev is holding a summit with Zardari, Karzai and Tajik President Emomali Rakhmon.Source: http://www.bloomberg.com/news/2011-09-02/russia-seeks-entry-into-afghan-pakistani-tajik-energy-projects.html
After about a month, the pipeline will reach sufficient pressure to operate, and then Gazprom, the Russian natural gas company, will start moving fuel along the route. A formal opening ceremony is scheduled for this autumn in Germany. Nordstream was championed by Mr. Putin and the former chancellor of Germany, Gerhard Schröder. It is designed to avoid shipping Siberian natural gas through former Soviet and East bloc states on its way to more lucrative markets in Western Europe.
Work on the 760-mile, or 1,224 kilometer, pipeline wrapped up in August with a final weld on the German side. That completed one of the most significant — or, at least, costly — pieces of underwater infrastructure in Europe since the Channel Tunnel opened two decades ago. The project was highly contentious because shipping natural gas through existing, and currently underused, on-land pipelines in Ukraine would have been significantly less expensive than building the new €8.8 billion, or $12.4 billion, Nordstream pipeline.
German consumers will ultimately bear the price with higher utility bills, as the pipeline was financed under long-term contracts locking in high natural gas prices. Mr. Putin, accompanied at ceremony by Mr. Schröder, used the occasion to point out that Ukraine’s leverage in price disputes with Gazprom had now diminished. Ukraine has been able to threaten to raise the cost of shipping gas in response to demands for price increases from Gazprom. With Nordstream, Gazprom now has an additional means to send gas to Europe.
“That exclusivity is now disappearing,” Mr. Putin said. Mr. Putin and Mr. Schröder, who served as chairman of the board of the development company, also endorsed Nordstream’s undersea trade route as more secure and protecting German consumers from fuel shutoffs in often politically tinged disputes between Russia and its former Soviet neighbors. Just this month, Ukraine and Russia reopened talks on a gas contract, threatening a new dispute.
Calling Putin "an old friend of China," President Hu Jintao said the Russian leader's visit "moved forward the Sino-Russian comprehensive strategic relationship." In an interview with Chinese state media late Tuesday and released Wednesday, Putin praised cooperation with China and lashed out at the U.S., describing the dominance of the American dollar as parasitic. "The U.S. is not a parasite for the world economy, but the U.S. dollar's monopoly is a parasite," Putin said, according to a report on the interview from Xinhua, the Chinese government news agency. Putin said he offered the criticism constructively in a search for common solutions to ease a roiling world economy.
Putin's visit commemorated the 10th anniversary of a treaty of "Good-Neighborliness, Friendship and Cooperation" between the two former communist allies, who later came to the brink of war over ideological differences and territorial disputes. Chinese Foreign Ministry spokesman Liu Weimin called the visit a "great success" that charted the way ahead for relations. Putin has frequently tried to use Russia's burgeoning ties with Beijing as a counterbalance to U.S. global predominance. And Chinese leaders have reciprocated the gestures.
The Beijing trip follows Putin's recent announcement that he plans to swap jobs next year with President Dmitry Medvedev, returning him to the top position he held for eight years. Analysts have said that the change could see Russia tilt further toward China. Last week, the two countries squelched a U.N. Security Council resolution condemning Syria for its brutal crackdown on pro-reform protesters that has killed nearly 3,000 people since March. Their vetoes drew heavy criticism from Washington.
After meeting Putin on Tuesday Premier Wen Jiabao told reporters that China wanted to push ahead a "comprehensive strategic partnership" with Russia that would safeguard world stability and development. But even as they reach out to each other, strains are evident between Moscow and Beijing in the trade and security issues that have bolstered relations over the past decade. Moscow is unhappy with China's copying of Russian fighter jets and other military hardware and recently announced the arrest of a Chinese man accused of seeking to buy military secrets.
While trade is booming -- rising, by China's count, to more than 39 percent to $35.9 billion in the first half of the year from the same period last year -- it's heavily geared toward Chinese purchases of Russian resources. Moscow wants more Chinese investment in Russia itself. Wrangling over the price of gas to be delivered by two Siberian pipelines has gone on for two years and come to symbolize the difficulties the former Cold War rivals still have in cooperating. Russia prefers to link gas prices to oil prices, as it does in Europe, while China wants a lower price. If Russia's OAO Gazprom and China National Petroleum Corp. can reach a deal, deliveries are to start by 2015.
China to Invest in Russian Fund
The deal is a small one for CIC, which made $35.7 billion in new investments last year, but is helpful for Russian and Chinese leaders who are eager to show progress in a relationship that has long suffered from mutual mistrust. It also helps to divert attention from the questions surrounding the gas deal which has stalled over pricing. Chinese companies have long struggled to invest in Russia, where they have faced popular and political hurdles. Concerns over inefficient and corrupt Russian institutions have also served as a deterrent to Chinese investment. Kirill Dmitriev, chief executive of the Russian Direct Investment Fund, said in an interview Tuesday that Moscow was working to address obstacles for Chinese investors.
"Clearly, bureaucracy, courts and transparency are real issues, and the Russian government is addressing them," he said. "People perceive Russia as more risky than it actually is, and I believe that is actually a big driver of the lack of investment."
The Russian Direct Investment Fund will match the $1 billion investment from CIC, according to a statement by the fund, and will put the money into a new offshoot fund called the Russia-China Investment Fund. The new fund aims to raise an additional $1 billion to $2 billion in Chinese investment, though Mr. Dmitriev declined to name other potential investors.
Early fund projects would begin by the third quarter of next year, Mr. Dmitriev said, and would likely include logistics, infrastructure and agriculture, underscoring the countries' attempts to diversify economic ties, which have long relied on resources like oil and gas or minerals. "We believe that there are numerous deals in nonresource sectors to be pursued," he said. The countries appeared to remain far apart in talks on the planned gas pipelines, which both countries had earlier hoped to conclude before Chinese President Hu Jintao's state visit to Russia this past June.
Mr. Putin—who arrived in China Tuesday for a two-day visit, his first overseas trip since he announced last month plans to again seek the Russian presidency—said following a meeting with Premier Wen Jiabao that the two sides were still working through a variety of economic and trade issues. "Issues of a pragmatic nature are being resolved, and this is good," Mr. Putin said. "Those who sell always want to sell at a higher price, while those who buy want to buy at a lower price. We need to reach a compromise which will satisfy both sides."
Russia's OAO Gazprom and China National Petroleum Corp. remain deadlocked over the price China will pay for imported natural gas from Russia. The planned pipelines could pump 70 billion cubic meters of gas to China each year. Gas pumped through the lines could amount to 2% of Russia's gross domestic product each year, analysts have said.
Beijing and Moscow have been keen to talk up economic ties, while diplomatic relations have seen some strains. The Chinese state-run Xinhua news agency quoted Mr. Putin as saying the two sides would seek new solutions in solving "occasionally occurring" problems.
Last week, Moscow revealed it had arrested a Chinese national on allegations of espionage, after it said he had attempted to purchase documentation for Russian S-300 missile systems. At a briefing Monday, Foreign Ministry spokesman Liu Weimin declined to comment on the arrest. Russian officials have also expressed concerns over China's apparent copying of Russian military hardware, including the Su-27 fighter jet. Chinese officials have previously declined to comment on the issue.
The countries have coordinated recent votes at the United Nations Security Council, where they both have veto power. Both sides abstained on a vote authorizing air strikes led by the North Atlantic Treaty Organization to help Libyan rebels seeking to overthrow Col. Moammar Gadhafi. More recently they both vetoed a Security Council resolution that would have condemned Syria's violent crackdown on protesters.
On Tuesday, Mr. Liu, the Foreign Ministry spokesman, said the Syrian government needed to listen to its people's calls for reform. "The Syrian government should respond to people's reasonable expectations and appeals, and resolve issues through dialogue and consultations," Mr. Liu said.
The implementation of the project will pave the way for travelling around the Black Sea smoothly. Moreover, the project provides for the construction of a large number of exits, and this will make it possible for linking the Black Sea circular highway with Armenia, Azerbaijan, Albania and Serbia. This is a key project, which is equally attractive for all countries, says an expert at the Russian Institute of Contemporary Development, Nikita Maslennikov.
"This concerns the development of a transport infrastructure that will provide an impetus to the expansion of the economic space and entrepreneurial initiatives. In any case, this is linked to a system the importance of which is impossible to assess now," says Nikita Maslennikov. Among these are the construction industry, and employment, because the given countries will have to reconstruct over 7 thousand kilometers of existing roads and to upgrade them to international highway standards. Moreover, the growing tourist and cargo flows will stimulate the work of ports, says Nikita Maslennikov.
"There is a need to develop the port infrastructure and build docks, and make maximum efforts to promote maritime transport. The construction of roads will naturally stimulate the development of ports and shipping as a whole. All this is sufficient to assess the Russian initiative positively and to draw serious attention to the project," Nikita Maslennikov said. Russia will take part in the project by taking into account the development of the transport infrastructure for the 2014 Olympic Games in Sochi. This is an additional guarantee that Russia will construct its sector in line with international standards. This concerns first and foremost assuring safety and the quality of services provided along the highway. Moreover, Russia proposed to draw up a programme to construct a Europe-Caucasus-Asia
It will link France with China and will pass through Belgium, Germany, Poland, Ukraine, Russia, Kazakhstan, Uzbekistan, Turkmenistan and Kyrgyzstan. This project considers the Black Sea circular highway as a link in this Europe-Asia highway. Another link of the intercontinental project is a road transport network which is being implemented by the Shanghai Cooperation Organization that embraces Russia, China and four Central Asian states.
Foreign investments in Armenia made $422 in first half of 2011, says National Statistical Service. In relation to the same period of previous year, foreign investments grew by 28.8%, direct investments by 58.6%. Russia has the largest share in the growth of foreign investments. In first half-year of 2011 Russian investments totaled $ 206 million, increased by 77% and make approximately half of all investments. The second largest investor in the economy of Armenia is France with $ 68 million. The French invest mainly in the sphere of telecommunications. U.S. investments reached $ 35 million, which is the third indicator (increased 2.8 times). U.S. companies, being mostly engaged in information technologies, directed $ 15 million to funding of scientific researches, $ 3 million for software and computer services.Source: http://news.am/eng/news/72782.html
More than 1,100 types of military equipment will be showcased at an arms show in Russia's Urals region on September 8-11, the Federal Service for Military-Technical Cooperation (FSMTC) said on Monday. The Nizhny Tagil 2011 exhibition will host 64 Russian and 20 foreign defense companies. Thirty-two official delegations from 17 countries are expected to attend the event. "A total of 1,102 military products, including 213 full-scale models, will be exhibited at the show," the FSMTC said in a statement. Russia will showcase for the first time its T-90AM main battle tank, BMD-4M airborne infantry fighting vehicle, BTR-82A wheeled armored personnel carrier, Tiger-M armored vehicle and Volk II and III armored vehicles. The show will also feature Italian Iveco armored vehicles to be assembled in Russia under license starting in 2011.Source: http://en.rian.ru/mlitary_news/20110905/166453847.html
ENA's parent company is a subsidiary of Russia's RAO Unified Energy Systems (UES) power giant. The Armenian network incurred massive losses before being sold by the government in 2002 to Midland Resources, an obscure British-registered firm. UES acquired it in 2004. ENA, which is one of Armenia's largest corporate taxpayers, has undergone significant restructuring and received sizable capital investments since then. It has become increasingly profitable in recent years despite a reduction in domestic electricity production. ENA profits jumped by 50 percent to 25.1 billion drams last year.
According to the PSRC, another 8.5 billion drams is to be invested in the national gas network operated by the ArmRosGazprom (ARG) company. Eighty percent of its stock is owned by Russia's Gazprom gas monopoly. The PSRC statement said ARG plans to upgrade its network and expand a massive underground gas storage facility located near Yerevan. The gas operator's investment commitments for 2011-2013 total 17.8 billion drams.
Road to war
“With the pretext of restoring a trunk-railway in Abkhazia, Russia conceals its preparation for a large-scale military operation aiming at annexation and occupation of Georgia,” stated Deputy Defense Minister of Georgia Batu Kutelia. “We consider the activity of Russia as another act of aggression directed against the territorial integrity of Georgia. No doubt, the Russian party is consolidating the military infrastructure to start a military intervention,” Deputy Foreign Minister of Georgia Grigol Vashadze echoed Mr Kutelia. “No one deploys railroad construction troops on the territory of another state unless a military intervention is plotted.” Mr Vashadze reported that due to the recent activity of Russia a 59th note of protest will be handed over to Russia’s ambassador to Georgia Vyacheslav Kovalenko. “In spite of the fact that it’s hard to find the Russian ambassador on occasions like this, we’ll find him, bring to the MFA and hand over the note,” Mr Vashadze added with irritation.
It is Russia’s deployment of its railroad construction troops in Abkhazia, which Russia’s Defense Minister announced Saturday, that aroused the indignation of the Georgian government. “According to the order of the President of the Russian Federation on rendering assistance to the republic of Abkhazia, work on restoring railroad lines and infrastructure has been started, where unarmed units and machines of the Railroad Construction Troops of the Russian Federation are engaged,” reported the Ministry’s Press-Service. In other words, the military justified their activity with the orders that Vladimir Putin gave to the government in April. By the way, Thursday Commander-in-Chief of the Railroad Construction Troops of the Russian Federation Lieutenant General Sergey Klimets stated that his subordinates are ready to provide aid to Abkhazia “in case a corresponding political decision is made.” It means that the decision to send Russian troops to Abkhazia was taken at the top level.
Yesterday Foreign Office Chief of the breakaway republic Sergey Shamba told Kommersant that some 400 Russian military were deployed in Abkhazia. However, Saturday Batu Kutelia stated that, apart from the railroad construction soldiers, 500 Russian commandos landed in Abkhazia. Curiously, on that day Russia’s Defense Ministry reported that a routine rotation of its peace-keepers was carried out in Abkhazia from May 25 to May 30, with “the total number of those replaced amounting to 500 people,” which equals to the figure given by the Georgian Defense Ministry’s experts. Tbilisi has already promised to rebuff “the Russian railroad landing.” “If Russia keeps on with that sort of activity, we’ll respond harshly to it,” Batu Kutelia threatened and promised that the international community will side with Georgia. A few hours later State Department Spokesman Sean McCormack said, “The United States is dismayed by Russia’s Defense Ministry announcement on May 31 that it intends to send more military forces into the Georgian region of Abkhazia without the consent of the Georgian Government. We have expressed our concerns to the Russian government and are in touch with the Georgian government about this latest announcement of a Russian military buildup,” emphasized the American diplomat.
Road to the South Caucasus
For all that, the restoration of the railroad on the territory of Abkhazia will allow Russia to gain much more than just a cheap transportation route for shipping Abkhazian gravel and sand to Sochi. Moscow has been repeatedly trying to repair the railroad linking it with Georgia via Abkhazia: It will enable Moscow to have a direct railroad communication with its key ally in the South Caucasus – Armenia. As far back as March, 2003 Moscow made its first attempt to do it – the question of restoring the railroad became one of the key points during the talks of Vladimir Putin and Georgia’s president Eduard Shevardnadze in Sochi. That time Russia and Georgia negotiated a bargain: Tbilisi provided for a smooth transit between Russia and Armenia, and Moscow promised to thrash out with Sukhumi the matter of Georgian refugees’ returning to Abkhazia. These negotiations didn’t stop even after the Rose Revolution broke out, and May, 2006 the authorities of Russia, Georgia, Armenia and Abkhazia even set up a consortium to restore the railroad. But the escalation of tensions between Moscow and Tbilisi in the autumn of 2006 prevented the plan from being realized.
Russia and Iran are restoring their direct rail connection via Armenia through projects that would enable bypassing two fragments of the former USSR-Iran corridor now blocked due to ethnic conflict. One is the already functioning Port Kavkaz-Poti ferry link, and the second is a combination of several planned projects in southern Armenia which will require the construction of a new railroad bypassing the blocked enclave of Nakhichevan. In this sense, Armenia is increasingly developing its role in North-South transportation and trade.
BACKGROUND: In recent months, several events have taken place relevant to the perspectives of strengthening of the Russia-Armenia-Iran axis. The first was the launching of the Port Kavkaz-Poti railcar-carrying ferry route between Russia and Georgia, a route designed specially for connecting Russia to Armenia. This route enables direct rail car circulation between Armenia and Russia, which has so far taken place through the Ukrainian port of Ilichevsk. It is expected to reduce the current time of transportation of cargoes between Armenia and Central Russia by half, from 20-25 days to 10-12 days, and to make it cheaper by 20 percent. This will to some extent end the severance of rail communication between Armenia and its largest trade partner, Russia, which resulted from the Georgian-Abkhazian conflict in August 1992. Although the ferry belongs to Reserve Capital Enterprising Corporation, a Swiss private company, the governments of Armenia and Russia have undertaken significant efforts to have this route opened. Moreover, the construction of a second ferry is underway, showing that the investor envisages intensifying traffic between Armenia and Russia, and, in perspective, with Central Asia as well.
Secondly, there are declared plans to explore and subsequently extract Armenian uranium reserves by the joint efforts of Russia and Armenia. A preliminary agreement was signed on April 23 during the visit of Sergei Kirienko, the head of the Russian Federal Atomic Energy Agency, to Armenia. According to initial assessments made in Soviet times, Armenia possesses deposits of uranium amounting at least 30,000 tons. They will be extracted and, most likely, transported to Russia, as Armenia has no facilities of uranium enrichment, and has declared that it has no intention to start uranium enrichment on its own.
The third element is the plan to construct an oil refinery near the Armenian town of Meghri, located in southern Armenia near the Iranian border. As reported after a Russian-Armenian summit in Sochi last January, this refinery was expected to have a capacity to process up to 7 million tons of Iranian oil annually, which would be pumped into Armenia through a special pipeline from the Iranian city if Tabriz, 100 km south of Meghri. Refinery products are expected to be shipped back to Iran by rail. The cost of the whole project, including the factory, the railroad and the pipeline, is reported to be US$ 1-2 billion. Gazprom-Nafta, a subsidiary of Russiaâ€™s state-run Gazprom gas monopoly, has said it is considering investing in this refinery, and Iran will also, most likely, invest in this politically motivated project.
Finally, the last few years have witnessed expanding cooperation between Armenia and Iran in the energy sphere. The Iran-Armenia gas pipeline officially inaugurated last March, is to supply gas to Armenia in return for supplies of electric power from Armenia. To this end, a power transition line between Armenia and Iran is to be constructed in addition to the two existing lines, and two hydropower plants on the border river of Araxes are to be constructed in the near future.
IMPLICATIONS: These events can combine to lead to the formation of a new North-South railroad corridor between Russia and Iran, to replace the Novorossiysk-Tbilisi-Yerevan-Nakhichevan-Julfa route, which was active in the Soviet times but is now interrupted at two places, one being Abkhazia and the other being the Nakhichevan-Armenia border, due to the Nagorno Karabakh conflict. The Abkhazian sector is bypassed through the above-mentioned Port-Kavkaz-Poti ferry link, but the Nakhichevan sector is more difficult to bypass. A railroad connecting Meghri to some part of the existing Julfa-Tabriz railroad may be constructed rather easily, as the construction needed may be as little as fifty kilometers. Nevertheless, the problem of connecting Meghri with the rest of the Armenian railways (and hence, with Russia) is a more complicated task. A railroad from Meghri to any other railroad segment in Armenia (bypassing Nakhichevan) will require installing at least 200 kilometers of new rail through a mostly mountainous territory, an undertaking that will be difficult technically and expensive.
However, there are factors which may make its prospects feasible. The first is the uranium issue, as most of the Armenian uranium deposits are reported to be located in the southern Armenian province of Syunik, in which Meghri is also located. As such, Russia (and probably other investors interested in Armenian uranium) may be interested in providing funding for the project of constructing a railroad from central Armenia to the future uranium mine of the Syunik marz and eventually, to Meghri. Preliminary reports about the intention of the state-owned company Russian Railways to make large investments in Armenia may be relevant in this sense. Tehran may also be interested in constructing this link, as it will help Iran to implement its plans of developing the countryâ€™s depressed north-western region, in particular, the so-called Aras Free Trade Zone which is adjacent to the Nakhichevan and Meghri sectors of the Iranian border and has its center in Julfa.
Besides an important role in restoring the Iran-Russia railroad route, Armenia is becoming an important partner for both from the energy viewpoint as well. Russia has important energy assets in Armenia, and has pledged to help it in building a new nuclear power station. The current station at Medzamor is expected to be closed in 2016, and according to a recent statement of President Robert Kocharian, construction of a new plant could start in 2012. The prospects for exporting Armenian uranium to Russia make such ties even tighter. As for Iran, it is set to increase its import of electricity from Armenia as seen from the above-mentioned joint plans.
CONCLUSIONS: Armenia is developing several large projects in transportation and trade with Russia on the one hand, and with Iran on the other. This may eventually result in the reopening of an important railroad corridor connecting Russia with the Gulf region. Armenia may be an important partner to both regional powers partly as a linking point in that corridor, and because of its involvement in different energy projects within the interest sphere of both powers.
The opposing factor:
The New Transcaucasian Railway
Leaders in Yerevan say the plan deliberately ignores the old rail link between Armenia and Turkey, which has been idle since the the two countries cut off diplomatic ties in 1993. Relations between Armenia and Azerbaijan are not much better: The two countries bitterly disagree over the enclave of Nagoro-Karabakh. The mountainous territory inside Azerbaijan has been controlled by ethnic Armenian forces since a 1994 cease-fire ended six years of fighting, during which over 30,000 people died.
Georgian President Mikhail Saakashvili, right, Turkish President Abdullah Gul, center, and Azerbaijani President Ilham Aliev, left, are seen at a ceremony marking the start of construction of a railroad that will link ex-Soviet republics in the Caucasus and Central Asia with Europe bypassing Russia, near Tbilisi, Georgia, Wednesday, Nov. 21, 2007. The US$600 million rail line will connect the eastern Turkish city of Kars with the Azerbaijani capital, Baku, on the Caspian Sea, via Georgia and its capital, Tbilisi.
ANKARA - The construction of the 76km long section of the Baku-Tbilisi-Kars (BTK) railway project in Turkey will start in July. Ministry of Transportation officials said on Thursday that the ground breaking ceremony for the construction of Turkey section of the BTK railway project would be held in June with the participation of presidents of Turkey, Azerbaijan, and Georgia. Georgia will build 29 km part of the railway from its border with Turkey to Akhalkalaki and will finish the renovation of an existing line that stretches from there to Tbilisi. The ground breaking ceremony for the construction of the part of the project in Georgia was held in November 2007. Turkey has allocated 380 million YTL for BTK railway project, which is qualified as "iron silk road". The railway will connect Turkey with Azerbaijan and other Turkic republics in Central Asia. The railway is expected to be operational in 2010 and carry about 30 million tons of freight a year.
The New "Silk Road"
A railroad through the southern Caucasus will soon connect Europe and Asia, fueling dreams and discord in the region. "There will be a continuous connection from Beijing in the People's Republic of China to London in the United Kingdom." (Baku-Tbilisi-Kars railway project discussed in Azerbaijan, World Bulletin, May 2009. ) The new railway is expected to transport 1.5 million passengers and 3 million tons of freight per year. Forecasts predict that by 2034 it will transport 3 million people and more than 16 million tons of goods. The total cost of the project is estimated at $500 million, with $200 million covered by Azerbaijan and the remaining cost to be covered by Turkey. (Gül says peace in Caucasus remains Turkey’s foreign policy priority, Today's Zaman, Aug 25, 2010.)
To be completed in 2012, this new railway may help Russian sectarians remaining along the route in Kars, Georgia and Azerbaijan by improving their local economies. Armenia, with close ties to Russia, is not included in the rail or pipeline projects. The first railways built 150 years ago, in the late 1800s in the Caucasus, destroyed the Molokan, Jumper and Doukhobor wagon building and cargo hauling industry and contributed to many resettling, about 1900, to Central Asia, the Far East, and North America.
The dynamite comes from Ankara [capital of Turkey]. Ten tons, and it takes two days. The truck climbs carefully, screwing 2,500 feet up the mountains of northeastern Turkey, where the clouded sun makes faraway ice fields roll like a distant sea. This is beautiful, forbidding country, through which a new railroad will soon run. Arslan Ustael awaits the dynamite in the snow, with night temperatures reaching 40 below. Standing before the rail tunnel, Ustael says that in this weather your spit freezes before it hits the ground. He is a young man still, 30, and free with Turkish good humor, even up here in the cold clouds waiting for the dynamite that will make the volcanic mountain agreeable to his demand to bore a tunnel through it. Free with good humor because he knows this is an undertaking that could make a young engineer's career: building the Baku-Tbilisi-Kars (BTK) railway, an "Iron Silk Road" that will connect the oil-rich Caspian Sea region to Turkey — and beyond to Europe.
For Ustael, chief of the tunnel operation on the Turkish-Georgian border, this railroad has become something else: a road to loneliness. Back in Trabzon, a temperate, Turkish Black Sea coastal town, his girlfriend's face clouded when she imagined two years in the Caucasus Mountains, for that is how long it will take to build this tunnel. She just couldn't do it. Ustael exhales, stirs the sugar through his tea. A man must make choices. Smoke hangs over the canteen. Workers chalky with tunnel dust stare distantly at the men in sun and shorts chasing a ball across the TV. Through the windows, another blizzard is mixing up the air. In World War I, 90,000 Ottoman soldiers waited in these mountains for the Russians to come. "Some froze to death without firing a shot," Ustael says. He grabs a hard hat and walks to the door. Tunnel work progresses in round-the-clock, three-hour shifts.
Work is likewise endless for the Turkish state, toiling to gain acceptance into the European Union (EU). Turks look indignantly at countries like Bulgaria and Romania that have already been accepted, places with much less developed economies and greater corruption. Turkey, the Cold War NATO ally, meanwhile, waits for an invitation that may never come. This "raises questions of fairness, at least," says N. Ahmet Kuşhanoğlu, the Turkish deputy director of transport in charge of railways. "Turkey's face is turned westward since two centuries." Now Turkey is looking east in order to make itself indispensable to the West. Once the Marmaray rail tunnel opens in 2013 beneath the Bosporus in Istanbul, trains from Baku will reach all the way to London. "It is easy to see that this railway shall serve Europe also," says Kuşhanoğlu.
Looking directly east, Turkey has lately sought to repair relations with its neighbor Armenia. In 1993 it had closed the border and shut down its rail service with Armenia as a sign of loyalty to Azerbaijan — a close Turkish ally with the same Muslim religion — after Christian Armenia helped ethnic Armenians in the Azerbaijan enclave of Nagorno-Karabakh wage a bloody war to secede. Last year in Zurich, under the watchful eyes of the EU and the U.S., Turkey signed an agreement with Armenia to mend diplomatic ties and reopen the border. But the Armenians then demanded that Turkey acknowledge that the 1915 massacres of its people constituted genocide, which Turkey is loath to do. For their part, the Turks began insisting on some resolution to the Nagorno-Karabakh conflict. Since neither is likely to happen anytime soon, the deal — and the opportunity for a rapprochement — collapsed last spring.
A bridge between Turkey and Armenia actually does exist, though most of it has crumbled into the Akhuryan River, which cuts deeply through a gorge that serves as the border between the two countries. The Silk Road city of Ani stands abandoned along this part of the border, its mosques and churches intact after a thousand years, its bazaars echoing in a winter wind. Beyond an electric fence and across the river, Armenian guard towers keep watch over the ruins. [Opening scenes for the Molokan movie "Deli Deli Olma" show Ani.]
Some 50 miles north of Ani, Ustael's workers continue to dig 13 feet every day. Once completed, the tunnel will run for a mile and a half, 1,300 feet beneath the surface. It will be one of the longest in Turkey, Ustael says, and everyone will know his name. "Maybe then I can go work someplace warm."
Ustael spends his downtime in Kars, 42 miles south of the border, the two-hour drive made eventful by the slippery fact of coming down the mountain. Along icy roads, the car twists through slopeside villages, past minarets and the mud roofs of stone huts overgrown with grass. A vast westward migration of people in search of jobs has robbed these villages of all but the least mobile. Foxes forage at the roadside, headlights igniting their eyes.
In Kars, the site of great 19th-century battles between Ottoman Turks and Russians, the hilltop citadel remains. The women stay indoors. The men walk arm in arm down the streets, savoring a drink of raki in the saloons that exist in this region of lax Islam. Raki tastes like the anise-flavored pastis of France, but there is little European refinement in Kars. That could change when the BTK links this city to Baku, its wealthy antipode on the Caspian, injecting new revenue into the local economy. The governor of Kars, Ahmet Kara, talks of how the railroad will transform Kars into a city "important in the world's eyes." Behind Kara hangs a photo of Mustafa Kemal, or Atatürk, the first president of Turkey, who turned the Ottoman Empire into a modern, secular state, encouraging Western ways and outlawing the fez [hat].
With a knit cap on his head and bundled in a thick anorak [heavy jacket with a hood], Ustael watches a drill needle the far wall of the tunnel, making small stones out of solid rock. A front loader strains up the tunnel's incline, its bucket carrying a ton of freshly dislodged stone. It emerges from the tunnel and rolls into the blizzard, driving past Ustael toward a waiting truck. He says he wants to contribute to modern Turkey, to help bridge East and West. When the dynamite arrives, he laughs when he sees that it was made in China; it has already crossed this border once before.
There will be no explosions today. The mountain rock is soft enough for the drill to do its work without dynamite. Ustael looks down the tunnel toward Georgia. "We haven't found gold yet," he jokes. The stones tumble from the front loader into the truck, the crash almost drowning out his voice. "The Silk Road will live again."
They're not hiring in Akhalkalaki [, location of last Doukhobors in Georgia. A station along this railway lies 1 mile east of Ninotsminda (Doukhobor/Russian village Bogdanovka)]. There's no gold here either. Not much glitters in the hardscrabble hills near this town in the Georgian south. This is where the old railroad from Georgia's capital city of Tbilisi terminates. Beginning here, 60 miles of new rail will be laid, running south through Ustael's mountain tunnel to Kars. Another 75 miles of existing rail will be rehabilitated. Work begins with the thaw.
Akhalkalaki is in Georgia, but most of its residents are ethnically Armenian—and desperately poor. The factories in Akhalkalaki were dismantled after the Soviet collapse, their components sold off in the new capitalism. Since the agricultural collectives shut down, once fertile lands have overgrown with weeds. Bandits clipped the aluminum wires and copper connectors that helped propel rail cars, selling the metal in Iran and Turkey. The economy took a big hit in 2007, when the Russians closed a military base here.
There is no work, so the men go to Moscow, where they step into the orange jumpsuits of the street cleaner, sending money back home. Many who have stayed feel neglected by the central Georgian government. Protests have been frequent. Very few people in Akhalkalaki and the surrounding Javakheti region speak Georgian, and in the schools there is no one to teach the language. During the 1990s the prospect loomed that Javakheti could be Georgia's next breakaway region, like Abkhazia and South Ossetia in the north, which declared independence in the early 1990s but remain largely unrecognized.
Now Georgia is counting on the BTK railway to boost economic activity and help integrate this turbulent Armenian enclave into the rest of the country. When plans to open the railway were first announced, Georgia's Armenians opposed its construction, citing the unfairness of its bypassing Armenia. But today in Akhalkalaki there is a small hope that the new railroad will alleviate this long postcommunist endurance.
Grigoriy Lazarev stands guard at Akhalkalaki's outdoor bazaar. He takes potatoes on consignment from a local farmer, barters them for mandarins, then sells the fruit at the bazaar for 40 tetri a kilo, or about ten cents a pound. He would like to work on the railroad. "I am a mechanic, a welder, a master engineer," he says. "Selling mandarins is not good for my psyche." He stands before a pile of fruit in the trunk of his green Moskvitch, looking left and right at the many others who also sell mandarins here. In Soviet days this street had order, Lazarev says. "But everybody became sellers." He is 58 years old, has only enough teeth to chew soft food like citrus fruit. He has two young children, and a few tetri jangle in his coat pocket.
When Lazarev drove two hours to the town of Kartsakhi to apply for work on the railroad, the contractors turned him away. He visited the camp forming on the outskirts of Akhalkalaki, where Turkish and Azerbaijani skilled workers will soon congregate. You cannot operate a Komatsu excavator, they said. You do not speak Georgian.
The ministers in Tbilisi say Akhalkalaki will be the site of a critical station on the Iron Silk Road, where trains will switch between European and Russian rail gauges. For people in Akhalkalaki, it is difficult to imagine how they will benefit. Like Lazarev, many hundreds of locals have petitioned for railroad work, yet such work remains elusive.
Conditions have improved since Mikheil Saakashvili assumed the Georgian presidency — people in Akhalkalaki will admit that. Under Eduard Shevardnadze, they had electricity only five hours a day — while they slept — long enough for bread to bake in time for morning. It was subsistence living: no TV, poor roads, little interaction with Tbilisi, and a rationing of the wood that fueled the house stoves that kept people from freezing in their beds. Now there are a few good roads and electricity all day, if not running water in every home. It is often cold in Akhalkalaki, even indoors, and the abiding stress makes the people wander these streets weakly, nothing like the powerful Narts, the fabled giants that inhabited the Caucasus before humans arrived and that inspired them to carve mountains into kingdoms and then into nations.
Just 19 years old as a nation, Georgia is struggling through its adolescence. Seven years ago the Rose Revolution engendered all manner of youthful aspiration. Membership in NATO. Inclusion in the European Union. Bringing the breakaway regions of Abkhazia and South Ossetia under firm federal control. Reworking relations with Russia. Saakashvili wanted it all, wanted it quickly. If not for Georgia's northerly neighbor, he might have gotten it all.
The Russians have long felt a sense of entitlement toward Georgia, for they were the ones who folded Georgian nobility into their ranks during the 19th century, forming many principalities into a single governable entity, a Christian fortification in a region otherwise allied with the Ottomans or Persians. Russia also feels a deep emotional attachment to a land romanticized by Aleksandr Pushkin and Leo Tolstoy. But benevolence is a matter of perspective. Soon after Alexander I attempted to adopt Georgia in 1801, the widowed Georgian queen greeted the tsar's envoy with a dagger in the side, killing him.
More recently tensions spiked as Russia, fed up with Georgia's Western desires, closed the border between the two countries in 2006. Russia worries that if Georgia gains entry to the Western institutions it so esteems, this could inspire similar freethinking in the northern Caucasus— including the Russian regions of Dagestan, Ingushetiya, and Chechnya — which continues to shudder with explosions and assassinations that threaten Moscow's territorial hold.
The long-running tensions between Russia and Georgia escalated into war in the summer of 2008. Russia moved to assert control over the breakaway regions. Its troops routed Georgia's army, and Russia recognized South Ossetia and Abkhazia as new nations. It was a reminder that a small skirmish in these borderlands could spark a global showdown. Yet the EU and the U.S. were notably indisposed to intervene. Since the war, Georgia's pro-Western policy has stalled. Though the border between the two countries reopened last March, tensions are still high.
Like Prometheus, whom the gods chained to the Caucasus as punishment for giving humanity the power of fire, Georgia cannot escape its coordinates. Yet its position on the map may be its strongest asset. For NATO, the southern Caucasus is now viewed as a needed route for supplying the war in Afghanistan, ever since terrorist attacks in November 2008 began threatening the supply route through Pakistan's Khyber Pass. For Turkey, an important trade partner, Georgia is the gate to Central Asia. Armenia and Russia cannot trade with each other without going through Georgia. And Azerbaijani oil cannot reach the Mediterranean without passing through Georgia, earning the country $65 million in annual transit fees.
Georgia is a small player at the table, left to stack small chips. Indeed, the most significant impact of the Iron Silk Road on Georgia may prove to be the dismay it will create in the Black Sea ports of Batumi and Poti, the country's most dynamic economic centers, once freight can be diverted to Turkey instead. Still, Georgia can hope that if there's another conflict with Russia, European countries will cry foul if their trade through the southern Caucasus is disrupted.
In Akhalkalaki, Grigoriy Lazarev packs up his scale and its rusted one- and five-kilogram weights, and slowly walks away from the bazaar. He passes a funeral procession running along the main thoroughfare, a photo of the deceased man affixed to the windshield of a sedan. Arms linked, men walk up the mud of the street, women up the mud of the sidewalk.
Lazarev's small house was built in 1850, in the time of hard-willed Nicholas I. The roof leans severely, threatening to cave. Lazarev cannot pay to fix it. He and his family live off his mother's 90-lari (about $50) monthly pension. Still, when they have guests, Lazarev's wife, Liza, busies herself setting the table with what food they possess. A daughter, Gohar, sits at an old upright piano and practices her lessons, filling the small room with music and missteps. Lazarev grieves over his bad luck with the railroad and more generally, but not so loudly that his family will hear.
He rummages through a wardrobe and returns to the table. In his hand is a felt-backed shoulder board, its green fabric faded nearly to gray. It is the emblem of a lieutenant, an engineer with the Russian border service. "My grandfather served under Nicholas II," Lazarev says. "He built roads to Akhaltsikhe and Batumi." Lazarev smiles, a rare incident, and then the room goes dark. The electricity has gone out in Akhalkalaki, and the Lazarevs fall silent, but for the sound of the old piano.
It is electricity that initially impresses in Baku, its roadway lamps gilding the new asphalt from airport to city. Baku no longer supplies half the world's petroleum needs, as it did at the opening of the 20th century. But it feels like it does. In the past three years all manner of luxe stores have opened along the boulevard Neftchiler Prospekti, their windows reflecting the Caspian waters. Plans are progressing on a $4.5-billion, carbon-neutral resort on Zira Island, in the bay beyond the city. A Four Seasons Hotel will open shortly to house the guests drawn to Baku by the wealth of the state oil monopoly, located across the street. In the five years since the BTC pipeline began pumping oil out of the Caspian and money into Baku, Azerbaijan's economy has grown by more than 100 percent.
In the years after the former Turkish president, Süleyman Demirel, broached the topic of the Iron Silk Road in a Tbilisi speech in the late 1990s, the parties involved attempted to secure international funding for its construction. But the Armenian diaspora blocked all financing efforts, arguing convincingly that the routing of the railroad, like that of the oil pipeline before it, was a punitive gesture linked to Nagorno-Karabakh. Washington, the EU, and the World Bank stayed away. When the oil spigot turned on in 2005, briefly making Azerbaijan the world's fastest growing economy, the hesitance of international financiers no longer mattered. Azerbaijan can now afford its own portion of the railroad, upgrading 313 miles of outdated lines to the Georgian border. It is also loaning Georgia a few hundred million dollars for its section on neighborly terms — 25 years at one percent annually. Magnanimity is a pleasure of abundance.
No train passed through Musa Panahov's hometown in the Azerbaijani west, so he went out looking for one. He graduated from the Moscow Transportation Institute during the time of Leonid Brezhnev, then joined the Soviet railroad fraternity. The Soviet Union administered the world's largest, by volume, rail system; all strategic goods were transported by train. This centrally commanded network was a key part of the national security infrastructure, protected and privileged. Train employees had their own separate hospitals, their own schools, even their own militia. "We had everything except a foreign ministry," says Panahov, now Azerbaijan's deputy minister of transport.
Railroads are less important in Azerbaijan today. Oil and gas predominate, according to the plan of the late Heydar Aliyev, the country's third president and primary citizen, who by force of will forged Azerbaijan into what it is today: the relatively secure, relatively independent economic dictator of the region. Aliyev possessed the foresight to invite foreign firms to cooperate in Caspian development, and he understood the importance of the Iron Silk Road. Panahov is the man laying another plank in Aliyev's plan for Azerbaijanis' continued independence.
Panahov, 51, unrolls a map of the southern Caucasus across a table in his office and slowly runs his fingers from east to west, from sea to sea. At this table he negotiated with transport ministers from Georgia and Turkey in discussions that lasted until early in the morning. Cherubic but with graying hair, he speaks in a soft voice as he delineates the numbers. Total length of the Iron Silk Road: 500 miles. Total annual cargo capacity: 25 million tons. He speaks of the Azerbaijanis who fled to Turkey to escape communism. "It gives me a sense of happiness to connect brothers again," he says.
Azerbaijan became a Muslim parliamentary republic in 1918 and enjoyed that status for a couple of years. Since the breakup of the Soviet Union, however, little about Azerbaijan is visibly Muslim or parliamentarian. It is difficult to locate a minaret or an honest vote in Baku, less so a Bentley. Prosperity and social equality need not be strangers, but when a country has oil, it is tempting to focus on the former at the expense of the latter. More tempting still when the world needs what it has to give. The BTC is the only pipeline that delivers non-Russian, non-OPEC, non-Arabic oil to Mediterranean tankers. With the global oil supply diminishing, Azerbaijani influence has only risen.
Social justice is not a topic of public debate in Azerbaijan. More important to those in power is the fact that this small nation has managed to survive — and now thrive — in a difficult neighborhood. As one official said, "The optimists live in Georgia, the people who are complaining all the time live in Armenia, but the realists live in Azerbaijan." Or rather in Baku. A short ride on the existing rail leading northwest from the capital reveals not political realists but reality itself, the hovels that house those who have not felt the benefits of Baku's oil boom. A quarter of Azerbaijanis live below the poverty line.
These train cars retain the cracked gloss of Soviet adornment, frills and curtains that are rough to the touch, landscape paintings that hang in the spaces between the windows. A sorority of railway workers in starched uniforms tends to the train as it rolls through a world cleanly separated from Bakuvian luxury. One woman shovels coal into a furnace that heats the car's interior. Musa Panahov knows these trains, knows they do not rival their German, Japanese, or American counterparts. He is a railway man in an oil country. "But oil and gas will end someday," he says, smiling. "The railroad will live always."
- Proposed alliance between Russia and other nations could be 'one of the poles of the modern world'
- Unified market rules to be introduced between Russia, Belarus and Kazakhstan next year
- Putin seeking 'higher integration with the Eurasian Union'
However, given Putin's previous views, his current proposal will be seen by many as an indirect attempt to rebuild the Soviet Union. The single-party socialist state ruled by the Communist Party from 1922 until its collapse 20 years ago gave rise to Joseph Stalin and the Cold War political conflict from 1946 onwards. During the height of the Soviet Union, the USSR stood alongside the USA as one of the world's two major superpowers.
Nations of the former USSR included Armenia, Azerbaijan, Belarus, Estonia, Russia, and ten other countries. The Soviet Union spread over an area of more than 22 million square km, with a population in 1991 of over 293 million people. It expanded its borders by taking some countries by force, as it did in 1956 when Russian troops in 1,000 Soviet tanks poured into Budapest to claim Hungary. But by the end of the reign of Soviet president Mikhail Gorbachev in 1991, the end of the Cold War and increased nationalist movements among Soviet countries brought about the collapse of the Soviet Union. Former president Putin has lamented the 1991 collapse of the Soviet Union as the 'greatest geopolitical catastrophe of the 20th century', adding that the new group could be a major global player.
He has remained Russia's de-facto leader after shifting into the premier's job due to a term limit, and his protege and successor Dmitry Medvedev proposed last month that Putin run for president. Putin denied, however, that the proposed alliance would signal a return of a Soviet Union. He said: 'There is no talk about rebuilding the USSR in one way or another. 'It would be naive to try to restore or copy something that belongs to the past, but a close integration based on new values and economic and political foundation is a demand of the present time.'
THE ORIGINAL EURASIAN VISION
The concept of Eurasia, the huge area of land mass comprising Russia and some of its European and North Asian neighbours, was first featured in George Orwell's dystopian fantasy 1984. Under Orwell's vision of a Totalitarian dystopia after the Second World War, the UK falls into civil war and is integrated to Oceania, a society ruled by the dictatorship of 'the Party'. At the same time, the USSR annexed continental Europe and created the second superstate of Eurasia. The novel's third state, Eastasia is made of large regions of East Asia and Southeast Asia.
The novel describes the story of Winston Smith, who records how the world's three superstates are constantly fighting for the unconquered lands of the world. Smith recounts the Atomic Wars fought in western Russia, North America and Europe, and describes how 'the Party' referred to the postwar reorganisation of society as 'the Revolution'. Russia, Belarus and Kazakhstan already have formed an economic alliance that has removed customs barriers in mutual trade during the past summer. They are to introduce unified market rules and regulations starting Jan. 1.
Putin said that Kyrgyzstan and Tajikistan are expected to join the grouping. 'We aren't going to stop at that and are putting forward an ambitious task of reaching a new, higher level of integration with the Eurasian Union,' Putin said. 'Along with other key players and regional structures, such as the European Union, the United States, China and the Asia Pacific Economic Community, it should ensure stability of global development.' Russia has long called for stronger co-operation between ex-Soviet nations, but earlier attempts at forging closer ties between them have failed due to sharp economic differences.
Many former Soviet nations have looked westward and remain suspicious of Moscow's intentions, setting a rocky path to Putin's 'Eurasian Union.' Ukrainian President Viktor Yanukovych, considered more Russia-friendly than his pro-Western predecessor, has continued to focus on closer relations with the European Union, shattering Moscow's hopes for luring Ukraine into its orbit. Yanukovych complained last month that the Kremlin was trying to coerce Ukraine into joining the customs union of Russia, Belarus and Kazakhstan, and said that he wouldn't yield to pressure. Even Russia's ties with its closest ally, Belarus, has been marred by tensions.
Belarusian President Alexander Lukashenko, whose government is struggling with a spiralling financial crisis, has staunchly resisted Moscow's push for controlling stake in Belarus' top state-controlled industrial assets. Putin's plan also comes in potential competition with the Eastern Partnership, an initiative launched two years ago by Poland and Sweden. It aims to deepen European Union integration with six ex-Soviet nations: Georgia, Ukraine, Belarus, Moldova, Armenia and Azerbaijan.