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Energy in Azerbaijan

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  • #41
    Re: Energy in Azerbaijan

    What happened in Greece should be a lesson to all countries.....especially Armenia. I agree on that Londontsi
    B0zkurt Hunter


    • #42
      Re: Energy in Azerbaijan

      Believe it or not --- what took place in Greece , is also happening to USA & Euro. They are being fleeced by the bankers as well. The Fed system & the Central bank system are actually separate from govt of respective countries & only superficially appear as if they are the same as govt.
      This independent --- deep state manipulator --- ( not turk deep state ) is manipulating for a separate set of goals altogether.
      The politicians have in essence sold out to the Mega bank manipulator & are selling their respective countries & constituency down the road for their emmediate financial gain. And that is how the manipulator has robbed USA, Euro and all others their cancerous act has been able to infiltrate.
      The play is on for world dominance whereby the manipulator dictates to the individual countries.
      Russia, China, India, Iran, to name a few are trying to resist, but all are compelled to utilize the manipulators financial system at some point & time, or pay a steep penalty.
      An extremely incideous game is taking place right now.
      My personal opinion is this was one of the primary reasons for the Genocide. --- The Armenian people were one of the most difficult people to trick. Actually goes back before the Genocide, as one of our great strengths & wealth was the fact we derived much of our wealth & strength/independence from dealing amongst ourselves.


      • #43
        Re: Energy in Azerbaijan

        Originally posted by Artashes View Post
        Believe it or not --- what took place in Greece , is also happening to USA & Euro. They are being fleeced by the bankers as well. The Fed system & the Central bank system are actually separate from govt of respective countries & only superficially appear as if they are the same as govt.
        This independent --- deep state manipulator --- ( not turk deep state ) is manipulating for a separate set of goals altogether.
        The politicians have in essence sold out to the Mega bank manipulator & are selling their respective countries & constituency down the road for their emmediate financial gain. And that is how the manipulator has robbed USA, Euro and all others their cancerous act has been able to infiltrate.
        The play is on for world dominance whereby the manipulator dictates to the individual countries.
        Russia, China, India, Iran, to name a few are trying to resist, but all are compelled to utilize the manipulators financial system at some point & time, or pay a steep penalty.
        An extremely incideous game is taking place right now.
        My personal opinion is this was one of the primary reasons for the Genocide. --- The Armenian people were one of the most difficult people to trick. Actually goes back before the Genocide, as one of our great strengths & wealth was the fact we derived much of our wealth & strength/independence from dealing amongst ourselves.
        Also, you will hear this sentence often from USA govt representatives from the president on down ---
        --- " it's not in the USA best interest"
        Now, if you watch many of the presidents visits to foreign countries that are considered " emerging markets" you will see he (president) or his representitive(s) are accompanied by business representatives ,
        "BIG business" people.
        If you read the write up you will see the president extolling these business people & company's.
        The USA govt is actually representing big business which is NOT the same as representing the American people.
        Wheather it be bush senior, junior, clinton, or obama, they have all represented the mega bank financial interest of the super wealthy/powerful.
        These interests have not only done zero for the interest of the common but in fact have been highly deter mental to the common wheel.
        Although I'm not so good at getting reference material because of poor computer skill & min education, I can clearly recall these events. In each instance there is headline newspaper articles to be found & I'm sure not hard for the skilled researcher. Look to Mongolia visit by president & any & all other emerging countries that big USA business wants to infiltrate. Look who accompanies the official USA rep and look to the following write up in the main newspapers.


        • #44
          Re: Energy in Azerbaijan

          Baku Offers Iraq Access to European Pipelines

          BAGHDAD (Hurriyet)—Azerbaijan has offered Iraq access to the “Southern Gas Corridor” connecting the Caspian Sea to the European Union to help Baghdad sell natural gas to Europe, Baku’s foreign minister said Monday.

          Elmar Mammadyarov told journalists in the Iraqi capital that officials in Baghdad had already expressed interest in joining the massive project, which is supported by the United States and aims to reduce Europe’s dependence on gas from Russia.

          “It’s a huge project … and it’s open if Iraq is also interested to deliver their own natural gas,” Mammadyarov said at a joint news conference with his Iraqi counterpart Hoshyar Zebari.

          “The project is there, so if any other countries … want to join the Southern Gas Corridor, including Iraq, who already expressed some interest for this project, we are ready to start negotiations.” Gas pumped from the immense new Shah Deniz II field will travel across Azerbaijan and Georgia and across Turkey through a new Trans-Anatolian Pipeline, which is set to be a key part of the Southern Gas Corridor from the Caspian Sea to Turkey and the EU.

          Russia, meanwhile, backs a new pipeline under construction known as South Stream that aims to transport 63 billion cubic meters under the Black Sea to Europe.

          Europe’s annual demand for additional gas import may reach 80 billion cubic meters by 2020 and surpass 140 billion cubic meters by 2030, according to the South Stream website.

          Iraq currently produces relatively small quantities of gas, most of which is kept for its domestic market, and flares off a large amount of associated gas from its vast oil fields.

          But the country is looking to ramp up exports of natural gas to fund reconstruction of its conflict-battered economy and infrastructure.

          <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


          • #45
            Re: Energy in Azerbaijan

            Azeri SOCAR oil exports drop 6.5 pct in January-February
            Tue, 11th Mar 2014 15:08

            BAKU, March 11 (Reuters) - Azeri state energy company SOCAR cut oil exports by 6.5 percent to 3.727 million tonnes in January-February from 3.984 million tonnes a year ago due to falling oil production, a SOCAR source said.

            The source said SOCAR exported 169,649 tonnes of oil via Russia through the Baku-Novorossiisk pipeline in January-February, down from 251,755 tonnes in the same period last year.

            Exports of oil through the Baku-Supsa pipeline via Georgia increased to 565,129 tonnes from 560,936 tonnes last year, while exports through Baku-Tbilisi-Ceyhan via Georgia and Turkey were 2.992 million tonnes, down from 3.2 million tonnes last year.

            The Azeri government has been concerned about output from the Azeri, Chirag and Guneshli (ACG) oilfields - the biggest oil project in Azerbaijan and one of the largest globally for oil major BP - after production fell in 2012.

            Output from the project rose in 2013. As for this year, BP said in January that production might be slightly lower than in 2013 as the company planned maintenance work at the Central Azeri and West Azeri platforms, halting operations for a couple of weeks.

            It did not say when the work would start.

            Azerbaijan's oil and condensate output fell by 5.2 percent year on year in January to 3.6 million tonnes.

            The State Statistics committee has not yet released figures for output in February.

            For 2013, Azerbaijan has said oil and condensate production rose by 0.4 percent to 43.5 million tonnes after two years of decline.

            <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


            • #46
              Re: Energy in Azerbaijan

              OPEC predicts Azerbaijan's oil output at 0.86 mn bpd in 2014

              March 12--Azerbaijan's oil output will slightly decrease by 10,000 barrels per day (bpd) to 0.86 million bpd in 2014, according to OPEC March oil market report.

              The highest level of the country's oil production in 2014, according to the forecasts, will be observed in the fourth quarter -- at 0.89 million bpd. In the first quarter of the year the production will amount to 0.83 million bpd, in the second quarter -- to 0.86 million bpd, in the third quarter -- to 0.88 million bpd.

              In 2013 Azerbaijan's oil production amounted to 0.87 million bpd, according to OPEC estimations.

              Azerbaijan's proven oil reserves amounted to 7 billion barrels as of early 2013, according to BP. Oil production in the country amounted to 0.872 million bpd in 2012.

              The main volume of oil produced in Azerbaijan falls on the Azeri-Chirag-Guneshli offshore fields block. This block produces Azeri Light oil with a sulfur content of 0.15 percent (35 degrees API).

              Participants of the project to develop Azeri-Chirag-Guneshli are: BP (operator -- 35.83 percent), Chevron (11.27 percent), Inpex (10.96 percent), AzACG (11.6 percent), Statoil (8.56 percent), Exxon (8 percent), TPAO (6.75 percent), Itocu (4.3 percent) and ONGC Videsh (2.72 percent).

              __________________________________________________ __________________________________________________ _________________________
              Even if the Azeri news ( is telling the truth, at 0.86mbpd, their production would have dropped to 313 million barrels for the 2014, still following (and even underperforming) their expected decline:

              Also I must note that there is no sign of a reversal in 2013 as this articles sort of hint at through quoting Azerbaijan who tries to deviate from the basic numbers, which is why they are not releasing 2013 numbers 3 months into 2014.

              Their production since 2010 peak:
              2008: 870,000 Barrels per day
              2009:1,007,000 Barrels per day
              2010:1,035,000 Barrels per day
              2011: 983,000 Barrels per day
              2012 872,000 Barrels per day
              2013 870,000 Barrels per day (OPEC Estimate-according to
              2014 860,000 Barrels per day (BP Estimate-according to

              Last edited by Mher; 03-14-2014, 11:34 PM.
              <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


              • #47
                Re: Energy in Azerbaijan

                The Crimean Crisis and the Energy Ramifications for Azerbaijan
                March 26, 2014
                by Eugene Chausovsky

                The Kremlin’s partition of Crimea from Ukraine has put other states along Russia’s “near abroad” on edge. But while most of Russia’s neighbors seem to be worried about becoming Vladimir Putin’s next target, one state, Azerbaijan, stands to benefit, at least over the longer term, from the sudden turn of events.

                The Crimean crisis has revived fears among European Union states over their dependency on Russian natural gas imports, as well as the reliability of Ukraine as a transit state. This, in turn, is giving greater impetus to energy diversification projects across Europe, creating an opportunity for Azerbaijan to capitalize on its role as an alternative energy supplier at the head of the Southern Corridor energy route.

                Azerbaijan already plays an important role as a regional supplier. In 2012, Azerbaijan exported 24 million tons of oil and 7 billion cubic meters (bcm) of natural gas, primarily via the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzerum pipelines, respectively. Azerbaijan also has plans to significantly increase its natural gas exports once the Shah Deniz II gas field comes online in 2017-2018. That will mean an additional 10 (bcm) of Azerbaijani gas heading to Europe.

                While the opening of Shah Deniz II can certainly fill Baku’s coffers, the existing export arrangement falls short of maximizing Azerbaijan’s earnings potential. The pivotal movement for Baku, at least prior to the outbreak of the Crimea crisis, came in June of last year, when a consortium developing the Shah Deniz field ended the long-running competition over export routes by choosing the Trans-Adriatic Pipeline (TAP) project over the more ambitious Nabucco West initiative. Azerbaijan had been genuinely interested in developing Nabucco West, but Russia managed to undermine the project by negotiating lower natural gas prices with several Central European countries along its route, including Bulgaria and Hungary. Russia also got these countries to sign onto its own pipeline project known as South Stream, further compromising the attractiveness of Nabucco West.

                In the end, Azerbaijani officials felt compelled to go with the more modest TAP pipeline, with its 10 bcm pipeline capacity, compared to that of the 23 bcm-capacity Nabucco West. The TAP route, which goes through Turkey and Greece to Italy, avoided Central Europe altogether and the potentially lucrative market it offered to Azerbaijan.

                The rapidly widening rift between Russia and the West over Ukraine has given new life to Azerbaijan's role as an alternative energy supplier. The EU has already frozen negotiations with Russia over South Stream in order to "take into account broader political developments, including the Crimea crisis," EU Energy Commissioner Günther Oettinger said. On March 21, Paolo Scaroni, head of the Italian energy firm ENI, a 20 percent shareholder in South Stream, went even further; “I don't know if South Stream will ever be built.”

                If South Stream does indeed head south, Azerbaijan is well situated to fill the resulting export void. The fracture in EU-Russian relations not only provides greater momentum for TAP, but also larger energy projects down the line, potentially even the revival of some form of the Nabucco project. "If before the EU limited its support to important strategic projects like Nabucco by statements only, now it will have to act in a way to facilitate the materialization of those projects," according to Gulmira Rzayeva, an Azerbaijani energy analyst.

                While new opportunities may be opening, Azerbaijan needs to move carefully. Aggressive action could invite Russian retribution. Moscow has proven that it is willing to disrupt energy supplies in order to advance its interests -- not only in Ukraine, but also in neighboring Georgia during the 2008 war. Yet, if the past is any indicator, Azerbaijani officials are capable of finessing the energy export issue. Baku has already shown that it can find the balancing point amid competing geopolitical interests, as Azerbaijan supplies energy not only to Turkey and the West, but also to Russia and Iran.

                Ultimately, the Ukraine crisis provides both risks and opportunities for Baku. The odds seem much better today than just a month ago that Baku, given its strategic location and energy resources, can emerge in a stronger energy-export position in the coming months and years.

                Editor's note: Eugene Chausovsky is a Eurasia Analyst at Stratfor [].


                • #48
                  Re: Energy in Azerbaijan


                  Does Declining Oil Revenue Equal Less Security for Azerbaijan?
                  By Eric Eissler for ISN
                  March 25, 2014

                  [Summary: Declining oil revenues and a changing energy marketplace are
                  placing Azerbaijan's social and economic development under strain.
                  Worse still, observes Eric Eissler, the lost income might curtail the
                  country's defense spending at a time when Baku needs it most.]

                  To say that Azerbaijan lives in a unique but troubled geopolitical
                  location is perhaps an understatement. Flanked by assertive regional
                  powers and embroiled in a `frozen' conflict with neighboring Armenia
                  (which still occupies 20% of Azerbaijani territory), Baku's diplomatic
                  relations are undoubtedly complex. Nevertheless, this former Soviet
                  republic has been able to utilize its hydrocarbon wealth to balance
                  its regional ties and safeguard its overall security. But the veneer
                  might be slowly starting to slip.

                  Rising from the Ashes

                  Upon gaining independence, Azerbaijan inherited a massive quantity of
                  hydrocarbon reserves, estimated in 2012 to stand at 7 billion barrels
                  of oil and 0.9 tcm of natural gas Put another way, the country was
                  effectively born with a ready-made source of income that could boost
                  its social and economic development during a period of great
                  uncertainty. In order to better capitalize upon this, Baku established
                  the State Oil Fund of Azerbaijan Republic (SOFAZ) in December 2000.
                  Since then, the revenues that it has pumped into Azerbaijan have
                  formed the backbone of the country's development.

                  Indeed, the amount of hydrocarbons-based revenue that SOFAZ has
                  injected into the country increased dramatically between 2000 and
                  2013. In 2007, for example, the fund invested $686 million back into
                  the country. By 2012, however, this figure increased to $11.64
                  billion. In total, Azerbaijan has allocated an estimated $49.73
                  billion for economic development and regeneration.

                  A major benefactor of this investment has been Azerbaijan's armed
                  forces. In an address to a military parade in June 2013, President
                  Ilham Aliev laid bare the extent of his country's defense expenditure
                  when he declared:

                  `In 2003, our military budget was $163 million. Last year [2012] this
                  figure was $3.6 billion, this year [2013] it has reached $3.7 billion.
                  This in itself shows that military buildup is the top priority, great
                  funds are allocated from our budget for military buildup.'

                  Increased defense expenditure has allowed Azerbaijan to gain the
                  military upper hand against Russian-backed Armenia. Baku has invested
                  heavily in purchases of combat and transport helicopters, combat
                  aircraft and air defenses that can be deployed along the `line of
                  contact'. Moreover, by possessing the strongest armed forces among the
                  South Caucasus states Azerbaijan has been able to keep Russia out of
                  its domestic politics. This, in turn, has enabled Baku to develop
                  close ties with the likes of Israel and the United States, thereby
                  boosting its international profile in the process. In marked contrast,
                  the only recent `positive' in Russo-Azerbaijani relations was Vladimir
                  Putin's visit to Baku in 2013 ` the first official Russian delegation
                  in seven years .

                  Trouble Ahead?

                  But the good times are possibly coming to an end, at least for
                  Azerbaijan's elite, pro-government forces and the country's military.
                  On December 3 2013, Baku gave the country's Tariff Council the green
                  light to raise gas and petrol prices. As a result, petrol prices
                  increased by up to 33% and natural gas prices almost doubled. This was
                  effectively the beginning of the end of cheap gas and petrol prices
                  for Azerbaijan's citizens.

                  Skyrocketing domestic fuel prices were quickly followed by an
                  announcement that SOFAZ will reduce its transfers of oil revenues to
                  state coffers in 2014. It has been estimated that SOFAZ's actions will
                  lead to a 17-18% reduction in government spending. This, in turn,
                  helps to explain why the government has dramatically hiked up the
                  price of domestic fuel. Dr. Vugar Bayramov, the Chairman of the Board
                  form the Center for Economic and Social Development (CESD) told the

                  `The government is attempting to compensate the budget with revenues
                  from the non-oil sector. One of the main reasons for increasing the
                  petrol tax rate was to compensate for this deficit.'

                  But why has Azerbaijan taken such drastic measures? The answer to this
                  question lies in declining oil production. Estimates suggest that
                  Azerbaijan produced on average 872,000 barrels per day in 2012. By
                  contrast, production stood at 1.02 million barrels per day in 2010.
                  And while Azerbaijan is increasingly developing its natural gas
                  exploration and production capabilities, gas alone will not be able to
                  offset declining oil production. That's due in part to a decline in
                  gas production from 17.24 bcm per annum in 2010 to 15.6 bcm per annum
                  in 2013.

                  In addition, Azerbaijan's gas sector also faces a number of additional
                  challenges. These include the United States' and the West's growing
                  exploitation of unconventional resources such as shale oil and gas, as
                  well as the vagaries of the oil and gas markets. While oil is sold on
                  the global marketplace, gas tends to be traded regionally and is only
                  sold on a global level as Liquefied Natural Gas (LNG). As a result,
                  gas sales are not as consistent as oil purchases. Gas prices remain
                  very much subject to current regional requirements and their
                  respective markets.

                  Currently, Azerbaijan's economy is not yet diversified enough to cope
                  with such a dramatic fall in oil revenues. This is also reflected by
                  the fact that many Azerbaijanis continue to live below the breadline.
                  While relative poverty has fallen in recent years, and Gross Domestic
                  Product (GDP) per capita has risen from $1,908 in 2002 to $6,220 in
                  2012, many citizens living outside of the capital continue to struggle
                  making a living. It's also difficult to see how Baku can make
                  much-needed investment in education and further training against a
                  backdrop of declining oil revenues.

                  Around the Neighborhood

                  Worse still, declining oil revenues casts further doubt over the
                  sustainability of Azerbaijan's defense expenditure at a time when it
                  arguably needs it most. Like many other former Soviet states,
                  Azerbaijan is undoubtedly viewing the events unfolding in Ukraine with
                  a sense of unease. The region as a whole is also likely to be unnerved
                  by popular demands in Russia for Putin to go after other `lost'
                  territories, such as Belarus and Kazakhstan. Yet, while there is no
                  suggestion that Azerbaijan is under immediate threat, the fact Moscow
                  has Russian troops based in neighboring Armenia might become too close
                  for comfort for Baku in the coming years.

                  Yet it could have been so different for Azerbaijan and its citizens.
                  While SOFAZ did a good job in terms of transferring the country's oil
                  revenues, it has done little in the way of improving economic
                  conditions for the generations to come. In 2012, for example, SOFAZ
                  made significant purchases of gold, only for the price of gold to fall
                  dramatically after the purchase. The same can also be said of its
                  investments in Turkish Lira, especially given that this currency
                  plummeted to all-time lows against the Dollar and the Euro in the
                  opening weeks of 2014.

                  Consequently, if Baku wants to continue lavishing its military with
                  substantial defense expenditure and improve social and economic
                  conditions for the majority of the population, it needs to keep a
                  tight rein on long-term planning and asset management. As it currently
                  stands, Azerbaijan is unable to meet both requirements. Bearing in
                  mind the neighborhood and times that it finds itself in, these are
                  lessons that the country needs to learn ` fast.


                  • #49
                    Re: Energy in Azerbaijan


                    From Estonia to Azerbaijan: American Strategy After Ukraine
                    by George Friedman
                    Tuesday, 25 March 2014

                    As I discussed last week, the fundamental problem that Ukraine poses
                    for Russia, beyond a long-term geographical threat, is a crisis in
                    internal legitimacy. Russian President Vladimir Putin has spent his
                    time in power rebuilding the authority of the Russian state within
                    Russia and the authority of Russia within the former Soviet Union.
                    The events in Ukraine undermine the second strategy and potentially
                    the first. If Putin cannot maintain at least Ukrainian neutrality,
                    then the world's perception of him as a master strategist is
                    shattered, and the legitimacy and authority he has built for the
                    Russian state is, at best, shaken.

                    Whatever the origins of the events in Ukraine, the United States is
                    now engaged in a confrontation with Russia. The Russians believe that
                    the United States was the prime mover behind regime change in
                    Ukraine. At the very least, the Russians intend to reverse events in
                    Ukraine. At most, the Russians have reached the conclusion that the
                    United States intends to undermine Russia's power. They will resist.
                    The United States has the option of declining confrontation, engaging
                    in meaningless sanctions against individuals and allowing events to
                    take their course. Alternatively, the United States can choose to
                    engage and confront the Russians.

                    A failure to engage at this point would cause countries around
                    Russia's periphery, from Estonia to Azerbaijan, to conclude that with
                    the United States withdrawn and Europe fragmented, they must reach an
                    accommodation with Russia. This will expand Russian power and open
                    the door to Russian influence spreading on the European Peninsula
                    itself. The United States has fought three wars (World War I, World
                    War II and the Cold War) to prevent hegemonic domination of the
                    region. Failure to engage would be a reversal of a century-old

                    The American dilemma is how to address the strategic context in a
                    global setting in which it is less involved in the Middle East and is
                    continuing to work toward a "pivot to Asia." Nor can the United
                    States simply allow events to take their course. The United States
                    needs a strategy that is economical and coherent militarily,
                    politically and financially. It has two advantages. Some of the
                    countries on Russia's periphery do not want to be dominated by her.
                    Russia, in spite of some strengths, is inherently weak and does not
                    require U.S. exertion on the order of the two World Wars, the Cold War
                    or even the Middle East engagements of the past decade.

                    The Russian and U.S. Positions

                    I discussed Russian options on Ukraine last week. Putin is now in a
                    position where, in order to retain with confidence his domestic
                    authority, he must act decisively to reverse the outcome. The problem
                    is there is no single decisive action that would reverse events.
                    Eventually, the inherent divisions in Ukraine might reverse events.
                    However, a direct invasion of eastern Ukraine would simply solidify
                    opposition to Russia in Kiev and trigger responses internationally
                    that he cannot predict. In the end, it would simply drive home that
                    although the Russians once held a dominant position in all of
                    Ukraine, they now hold it in less than half. In the long run, this
                    option -- like other short-term options -- would not solve the
                    Russian conundrum.

                    Whatever Putin does in Ukraine, he has two choices. One is simply to
                    accept the reversal, which I would argue that he cannot do. The
                    second is to take action in places where he might achieve rapid
                    diplomatic and political victories against the West -- the Baltics,
                    Moldova or the Caucasus -- while encouraging Ukraine's government to
                    collapse into gridlock and developing bilateral relations along the
                    Estonia-Azerbaijan line. This would prevent a U.S. strategy of
                    containment -- a strategy that worked during the Cold War and one
                    that the Europeans are incapable of implementing on their own. This
                    comes down to the Americans.

                    The United States has been developing, almost by default, a strategy
                    not of disengagement but of indirect engagement. Between 1989 and
                    2008, the U.S. strategy has been the use of U.S. troops as the
                    default for dealing with foreign issues. From Panama to Somalia,
                    Kosovo, Afghanistan and Iraq, the United States followed a policy of
                    direct and early involvement of U.S. military forces. However, this
                    was not the U.S. strategy from 1914 to 1989. Then, the strategy was
                    to provide political support to allies, followed by economic and
                    military aid, followed by advisers and limited forces, and in some
                    cases pre-positioned forces. The United States kept its main force in
                    reserve for circumstances in which (as in 1917 and 1942 and, to a
                    lesser degree, in Korea and Vietnam) allies could not contain the
                    potential hegemon. Main force was the last resort.

                    This was primarily a strategy of maintaining the balance of power. The
                    containment of the Soviet Union involved creating an alliance system
                    comprising countries at risk of Soviet attack. Containment was a
                    balance of power strategy that did not seek the capitulation of the
                    Soviet Union as much as increasing the risks of offensive action
                    using allied countries as the first barrier. The threat of full U.S.
                    intervention, potentially including nuclear weapons, coupled with the
                    alliance structure, constrained Soviet risk-taking.

                    Because the current Russian Federation is much weaker than the Soviet
                    Union was at its height and because the general geographic principle
                    in the region remains the same, a somewhat analogous balance of power
                    strategy is likely to emerge after the events in Ukraine. Similar to
                    the containment policy of 1945-1989, again in principle if not in
                    detail, it would combine economy of force and finance and limit the
                    development of Russia as a hegemonic power while exposing the United
                    States to limited and controlled risk.

                    The coalescence of this strategy is a development I forecast in two
                    books, The Next Decade and The Next 100 Years, as a concept I called
                    the Intermarium. The Intermarium was a plan pursued after World War I
                    by Polish leader Jozef Pilsudski for a federation, under Poland's
                    aegis, of Central and Eastern European countries. What is now
                    emerging is not the Intermarium, but it is close. And it is now
                    transforming from an abstract forecast to a concrete, if still
                    emergent, reality.
                    Forces Leading to the Alliance's Emergence

                    A direct military intervention by the United States in Ukraine is not
                    possible. First, Ukraine is a large country, and the force required to
                    protect it would outstrip U.S. capabilities. Second, supplying such a
                    force would require a logistics system that does not exist and would
                    take a long time to build. Finally, such an intervention would be
                    inconceivable without a strong alliance system extending to the West
                    and around the Black Sea. The United States can supply economic and
                    political support, but Ukraine cannot counterbalance Russia and the
                    United States cannot escalate to the point of using its own forces.
                    Ukraine is a battleground on which Russian forces would have an
                    advantage and a U.S. defeat would be possible.

                    If the United States chooses to confront Russia with a military
                    component, it must be on a stable perimeter and on as broad a front
                    as possible to extend Russian resources and decrease the probability
                    of Russian attack at any one point out of fear of retaliation
                    elsewhere. The ideal mechanism for such a strategy would be NATO,
                    which contains almost all of the critical countries save Azerbaijan
                    and Georgia. The problem is that NATO is not a functional alliance.
                    It was designed to fight the Cold War on a line far to the west of the
                    current line. More important, there was unity on the principle that
                    the Soviet Union represented an existential threat to Western Europe.

                    That consensus is no longer there. Different countries have different
                    perceptions of Russia and different concerns. For many, a replay of
                    the Cold War, even in the face of Russian actions in Ukraine, is
                    worse than accommodation. In addition, the end of the Cold War has
                    led to a massive drawdown of forces in Europe. NATO simply lacks the
                    force unless there is a massive and sudden buildup. That will not
                    occur because of the financial crisis, among other reasons. NATO
                    requires unanimity to act, and that unanimity is not there.

                    The countries that were at risk from 1945 to 1989 are not the same as
                    those at risk today. Many of these countries were part of the Soviet
                    Union then, and the rest were Soviet satellites. The old alliance
                    system was not built for this confrontation. The Estonia-Azerbaijan
                    line has as its primary interest retaining sovereignty in the face of
                    Russian power. The rest of Europe is not in jeopardy, and these
                    countries are not prepared to commit financial and military efforts
                    to a problem they believe can be managed with little risk to them.
                    Therefore, any American strategy must bypass NATO or at the very least
                    create new structures to organize the region.

                    Characteristics of the Alliance

                    Each of the various countries involved is unique and has to be
                    addressed that way. But these countries share the common danger that
                    events in Ukraine could spread and directly affect their national
                    security interests, including internal stability. As I observed, the
                    Baltics, Moldova and the Caucasus are areas where the Russians could
                    seek to compensate for their defeat. Because of this, and also
                    because of their intrinsic importance, Poland, Romania and Azerbaijan
                    must be the posts around which this alliance is built.

                    The Baltic salient, 145 kilometers (90 miles) from St. Petersburg in
                    Estonia, would be a target for Russian destabilization. Poland
                    borders the Baltics and is the leading figure in the Visegrad
                    battlegroup, an organization within the European Union. Poland is
                    eager for a closer military relationship with the United States, as
                    its national strategy has long been based on third-power guarantees
                    against aggressors. The Poles cannot defend themselves and the
                    Baltics, given the combat capabilities necessary for the task.

                    The Dniester River is 80 kilometers from Odessa, the main port on the
                    Black Sea for Ukraine and an important one for Russia. The Prut River
                    is about 200 kilometers from Bucharest, the capital of Romania.
                    Moldova is between these two rivers. It is a battleground region, at
                    least of competing political factions. Romania must be armed and
                    supported in protecting Moldova and in organizing southeastern Europe.
                    In Western hands, Moldova threatens Odessa, Ukraine's major port also
                    used by Russia on the Black Sea. In Russian hands, Moldova threatens

                    At the far end of the alliance structure I am envisioning is
                    Azerbaijan, on the Caspian Sea bordering Russia and Iran. Should
                    Dagestan and Chechnya destabilize, Azerbaijan -- which is Islamic and
                    majority Shiite but secular -- would become critical for limiting the
                    regional spread of jihadists. Azerbaijan also would support the
                    alliance's position in the Black Sea by supporting Georgia and would
                    serve as a bridge for relations (and energy) should Western relations
                    with Iran continue to improve. To the southwest, the very pro-Russian
                    Armenia -- which has a Russian troop presence and a long-term treaty
                    with Moscow -- could escalate tensions with Azerbaijan in
                    Nagorno-Karabakh. Previously, this was not a pressing issue for the
                    United States. Now it is. The security of Georgia and its ports on
                    the Black Sea requires Azerbaijan's inclusion in the alliance.


                    • #50
                      Re: Energy in Azerbaijan

                      Azerbaijan serves a more strategic purpose. Most of the countries in
                      the alliance are heavy importers of Russian energy; for instance, 91
                      percent of Poland's energy imports and 86 percent of Hungary's come
                      from Russia. There is no short-term solution to this problem, but
                      Russia needs the revenue from these exports as much as these
                      countries need the energy. Developing European shale and importing
                      U.S. energy is a long-term solution. A medium-term solution,
                      depending on pipeline developments that Russia has tended to block in
                      the past, is sending natural gas from Azerbaijan to Europe. Until now,
                      this has been a commercial issue, but it has become a strategically
                      critical issue. The Caspian region, of which Azerbaijan is the
                      lynchpin, is the only major alternative to Russia for energy.
                      Therefore, rapid expansion of pipelines to the heart of Europe is as
                      essential as providing Azerbaijan with the military capability to
                      defend itself (a capability it is prepared to pay for and, unlike
                      other allied countries, does not need to be underwritten).

                      The key to the pipeline will be Turkey's willingness to permit
                      transit. I have not included Turkey as a member of this alliance.
                      Its internal politics, complex relations and heavy energy dependence
                      on Russia make such participation difficult. I view Turkey in this
                      alliance structure as France in the Cold War. It was aligned yet
                      independent, militarily self-sufficient yet dependent on the
                      effective functioning of others. Turkey, inside or outside of the
                      formal structure, will play this role because the future of the Black
                      Sea, the Caucasus and southeastern Europe is essential to Ankara.

                      These countries, diverse as they are, share a desire not to be
                      dominated by the Russians. That commonality is a basis for forging
                      them into a functional military alliance. This is not an offensive
                      force but a force designed to deter Russian expansion. All of these
                      countries need modern military equipment, particularly air defense,
                      anti-tank and mobile infantry. In each case, the willingness of the
                      United States to supply these weapons, for cash or credit as the
                      situation requires, will strengthen pro-U.S. political forces in each
                      country and create a wall behind which Western investment can take
                      place. And it is an organization that others can join, which unlike
                      NATO does not allow each member the right to veto.

                      The Practicality of the U.S. Strategy

                      There are those who would criticize this alliance for including
                      members who do not share all the democratic values of the U.S. State
                      Department. This may be true. It is also true that during the Cold
                      War the United States was allied with the Shah's Iran, Turkey and
                      Greece under dictatorship and Mao's China after 1971. Having
                      encouraged Ukrainian independence, the United States -- in trying to
                      protect that independence and the independence of other countries in
                      the region -- is creating an alliance structure that will include
                      countries, such as Azerbaijan, that have been criticized. However, if
                      energy does not come from Azerbaijan, it will come from Russia, and
                      then the Ukrainian events will dissolve into tragic farce. The State
                      Department must grapple with the harsh forces its own policies have
                      unleashed. This suggests that the high-mindedness borne of benign
                      assumptions now proven to be illusions must make way for realpolitik

                      The balance of power strategy allows the United States to use the
                      natural inclination of allies to bolster its own position and take
                      various steps, of which military intervention is the last, not the
                      first. It recognizes that the United States, as nearly 25 percent of
                      the world's economy and the global maritime hegemon, cannot evade
                      involvement. Its very size and existence involves it. Nor can the
                      United States confine itself to gestures like sanctions on 20 people.
                      This is not seen as a sign of resolve as much as weakness. It does
                      mean that as the United States engages in issues like Ukraine and must
                      make strategic decisions, there are alternatives to intervention --
                      such as alliances. In this case, a natural alliance structure
                      presents itself -- a descendant of NATO but shaped for this crisis,
                      much like the alliance I forecast previously.

                      In my view, Russian power is limited and has flourished while the
                      United States was distracted by its wars in the Middle East and while
                      Europe struggled with its economic crisis. That does not mean Russia
                      is not dangerous. It has short-term advantages, and its insecurity
                      means that it will take risks. Weak and insecure states with
                      temporary advantages are dangerous. The United States has an interest
                      in acting early because early action is cheaper than acting in the
                      last extremity. This is a case of anti-air missiles, attack
                      helicopters, communications systems and training, among other things.
                      These are things the United States has in abundance. It is not a case
                      of deploying divisions, of which it has few. The Poles, Romanians,
                      Azerbaijanis and certainly the Turks can defend themselves. They need
                      weapons and training, and that will keep Russia contained within its
                      cauldron as it plays out a last hand as a great power.

                      George Friedman is the Chairman of Stratfor, a company he founded in
                      1996 that is now a leader in the field of global intelligence.
                      Friedman guides Stratfor's strategic vision and oversees the
                      development and training of the company's intelligence unit.