The Rise of the Russian Empire: Russo-Armenian Relations

[Haykakan]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

PUTIN CALLS ON ARMENIA AND AZERBAIJAN FOR A REAL DIALOGUE

Tert.am
14:46 ~U 08.06.10

Issues like Nagorno Karabakh conflict cannot be solved unilaterally,
Russia's Prime Minister Vladimir Putin said at a joint press conference
following a meeting with his Turkish counterpart Recep Tayyip Erdogan
in Istanbul.

"As I have stated before, such issues cannot unilaterally be solved.

The two nations should reconcile through a real dialogue. Armenia and
Azerbaijan should decide which of the versions is acceptable for them.

We should be patient and bring our approaches closer. Russia continues
its support, and we cannot exert pressure on any country. At the
same time we do not want Russia to leave the impression as if it
is partial," said Vladimir Putin as he responded to an Azerbaijani
reporter's question over Karabakh.

Further Russia's PM answered several issues pertaining to a recent
gas deal signed between Azerbaijan and Turkey, the Iranian nuclear
issue, as well as the recent Israeli raid on a Flotilla of Freedom
that carried humanitarian aid to the blockaded Gaza Strip.

[KanadaHye]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Russia to buy control of Uranium One

Vancouver-based Uranium One said Tuesday it has agreed to a deal that sells controlling interest to the Russian state-owned uranium mining company JSC Atomredmetzoloto.

In exchange, Uranium One will get interests in two southern Kazakhstan uranium mines.

The deal would have the Canadian company issue 356 million new common shares, worth about $932.7 million Cdn at their most recent market price, to JSC Atomredmetzoloto for stakes in the Akbastau and Zarechnoye joint ventures plus $642 million in cash.

Uranium One would acquire a 50 per cent interest in Akbastau and a 49.67 per cent interest in Zarechnoye.

The Russian company — also known as ARMZ — would increase its existing 23.1 per cent in Uranium One to at least 51 per cent.

The deal "positions the company to be among the world's top five uranium producers by 2011, as our Kazakh assets ramp up to full capacity," Uranium One CEO Jean Nortier said in a statement.

ARMZ has also agreed not to buy or sell any Uranium One shares for 18 months after closing of the deal, expected before the end of the year.

After closing, Uranium One will pay a special cash dividend of at least $1.12 per share to shareholders other than ARMZ.

The new assets will increase Uranium One's production in Kazakhstan by about 60 per cent to 16 million pounds.

Uranium One shares ended the day down nine cents, or 3.4 per cent, to $2.53 on the Toronto Stock Exchange.

http://www.cbc.ca/money/story/2010/0...armz-deal.html

[Haykakan]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Norway and Russia had every reason to have a adverserial relations with one another and it is good to see them effectively resolving such conflicts and becoming partners instead of enemies.

[Armanen]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Germany vs. Europe

Germany’s commitment to the European Union has been central to its postwar rehabilitation and its economic success. For years, Germany played the role in Europe that America so frequently plays globally — the locomotive whose dynamism and demand helps turn around recessions before they deepen into depressions. Now, at the worst possible moment, Germany is turning to nationalist illusions. Europe’s past economic successes are now viewed as German successes. Europe’s current deep problems are everyone else’s except Germany’s. That is neither realistic nor sustainable. But German politicians and commentators are callously and self-destructively feeding these ideas.


Earlier this year, when Germany was still refusing to participate in a bailout, the country’s largest newspaper by circulation, Bild, suggested Greece should sell the Acropolis to pay off its bond market creditors. (It estimated the monument could bring in $140 billion.) A senior member of Chancellor Angela Merkel’s party suggested auctioning off some of Greece’s Aegean islands. Meanwhile, a Bild poll showed a majority of Germans in favor of expelling Greece from the euro. After a rough stretch following reunification, Germany took the tough decisions necessary to restore its competitiveness and revive growth. As a result, it is doing far better than the rest of Europe, with a low fiscal deficit and strong export surpluses. But its export-dependent economy would sputter if European consumers — its main customers — could no longer afford to buy its goods. German banks lent billions to Greece and other troubled European countries. If things don’t turn around quickly, those loans may have to be written down.


Germany also has contributed less than its fair share to the global stimulus, preferring to free ride on American and Chinese stimulus spending. And the euro’s underlying problem — the lack of an enforceable common fiscal policy, which allowed Greece and the others to rack up deficits they could not afford — is the responsibility of all the euro’s creators, Germany prominent among them. Germans have not been eager to hear those less-flattering parts of the story, and their leaders haven’t been eager to tell them. For months, Mrs. Merkel resisted all appeals — by other European leaders and Washington — to, well, be a European leader. When Germany finally agreed to contribute to a bailout fund — under threat of a Continentwide crash — Europe’s economic problems were far worse, and Germany and others had to ante up a lot more cash.


Europe’s most-troubled economies today — Greece, Spain, Portugal and Italy — bear plenty of responsibility for this mess. They spent lavishly during the bubble. They failed to reform their rigid and inefficient labor markets and to contain their increasingly uncompetitive wage costs. The rest of Europe, including Germany, should have demanded adjustments earlier, but didn’t. With devaluation not an option for euro members, Europe’s high-deficit countries have been forced into steep tax increases and deep spending cuts to bring their soaring deficits under control and calm the bond markets. Necessary as they are, these cuts also run a very high risk of plunging the Continent into deep recession this year unless Germany offsets them with aggressive stimulus of its own. We hope Treasury Secretary Timothy Geithner will remind German officials of that on his visit to Berlin on Thursday.


Instead of committing to more spending, Germany is now preparing a multiyear program of deep spending cuts. Given its troubled history, we can understand its fear of deficit spending and inflation. But right now more German austerity will likely cripple Europe’s nascent recovery and Germany’s own prosperity. That is another hard truth that Mrs. Merkel needs to tell her party and her country.


Source: http://www.nytimes.com/2010/05/27/op...ml?ref=opinion

The End of the World as We know it?

For the past 500 years or so, world politics has mostly been driven by the actions and priorities of the transatlantic powers (aka "the West"). This era began with the development of European colonial empires, which eventually carved up most of the globe, spread ideas like Christianity, nationalism and democracy, and created many of the state boundaries that still exist today. (They also screwed a lot of things up in the process). Although other actors (e.g., Japan) played significant roles too, especially after 1945, the transatlantic community (broadly defined) had been the most important set of players for centuries.




Europe's decline after World War II was immediately followed the era of American liberal internationalism. With NATO and Japan as junior partners, the United States underwrote a variety of global institutions (mostly of its own making), maintained a vast array of military bases, waged and won a Cold War, and sought-with varying degrees of enthusiasm and success-to spread core "Western" values and institutions to different parts of the world.

I don't want to go all Spenglerian on you (or even Kennedy-esque) -- but I'm beginning to think this era is essentially over, and that we are on the cusp of a major shift in the landscape of world power.




Asia's share of world GDP already exceeds that of the United States or Europe, and a recent IMF study suggests it will be greater than the United States and Europe combined by 2030. Europe has already become a rather hollow military power, and the current economic crisis is going to force European states-and especially the United Kingdom -- to cut those capabilities even more. Needless to say, hopes that the euro might one day supplant the dollar look rather hollow today. Politics within many European countries is likely to get nasty as austerity kicks in, and there will inevitably be less money and less support for Europe's various philanthropic projects in Africa, Central Asia, or the Middle East. Such activities won't disappear entirely, but it's hard to see how they can continue at anywhere near their current levels.





America's situation is more favorable for several reasons (greater growth potential, a younger and still-growing population, more flexible labor markets, greater capacity to borrow abroad, etc.), but it will face analogous pressures of its own. We've piled up some serious debt due to the Iraq war and the 2008 financial crisis, unemployment remains uncomfortably high, the health care bill won't cut costs fast enough to make up for all those aging (and demanding) baby boomers, state and local governments are facing major fiscal problems of their own, resistance to taxation remains endemic, and we've got a lot of deferred maintenance in our national infrastructure. As Secretary of Defense Robert Gates acknowledged in a major speech last week, the Department of Defense won't be immune from these realities and it is going to have to make some serious cuts in the next few years too. And I'm betting that once the dust settles, the combined experience of Iraq and Afghanistan is going to cool U.S. enthusiasm for more open-ended and ill-conceived efforts at "nation-building," "regional transformation" or whatever other label you want to place on our mucking about in areas we don't understand and where we mostly don't belong.




Taken together, this means that the countries that have done the most to try to manage global politics over the past several centuries are going to be doing a lot less of that sort of activity in the decades to come. In some ways, this could be a good thing, because some Western meddling was misguided and harmful and it would be better if other countries started taking more responsibility for their own affairs. But it also means that some areas of the world are going to get messier, and in ways that could still affect us all directly. And it also means that a new set of players will be increasingly involved in shaping the global agenda, and in some unfamiliar ways.




Of course, to some extent the shifts I am describing merely reflect the fact some parts of the world are now developing rapidly, and shifting the global balance of power largely through their own efforts. China is the poster child for this trend, and its rapid rise is mostly due to Beijing have finally cast off the failed policies of the past century or so. Similar trends are evident in India, albeit more slowly, and in other Asian countries too.




But the impending end of the Atlantic Era also reflects the self-inflicted wounds that Europe and America have each suffered over the past decade. In the European case, it was the misguided attempt to float a common currency on an inadequate institutional foundation, combined with irresponsible budgetary practices (the Labor era in England), fiscal chicanery (Greece) or a speculative bubbles (Spain and Ireland). In the American case, it was simple hubris: somehow we convinced ourselves that markets would always go up, that debts did not need to be paid, that whole regions could be transformed in liberal democracies at a point of a rifle barrel, and that we really could run the world on the cheap and without raising taxes. In simple terms, we can now see that the United States and much of Europe were like happy drunks enjoying a pleasant if prolonged pub-crawl. But eventually the party has to ends, sobriety returns, and the hangover must be faced. Welcome to 2010.




If this analysis is even partly correct, then we are going to need some serious rethinking of grand strategy in both Europe and the United States. Hard choices will have to be made, and traditional world-views and familiar platitudes won't help us very much. Experience is valuable trait for policymakers in normal times, but it can also blind them when new circumstances arise and the conventional wisdom is no longer relevant. One doesn't see a lot of bold foreign policy thinking on either side of the Atlantic these days, and one could argue that lengthy service inside-the-Beltway (or even worse, at NATO headquarters) is one of the best ways to stamp the life out of any kernels of imagination that might arise.




Call me fanciful, but I'd still like to see Obama (or Cameron, or Merkel) create a "Team B" to inject some new thinking more directly into the policy process. Or why not create several? Why not a Team B on the future of NATO, another on the Middle East peace process, a third on how to deal with Iran, a fourth on how to rebuild global institutions, and yet another on future relations with China? Don't give these groups any formal authority, but tell them to take a zero-based look at our current strategy and populate them with at least a few people who might not pass a Senate confirmation hearing and who haven't spent their whole lives repeating what everyone else has said before. And then listen to what they have to say. Who knows? They might actually come up with something useful.




Source: http://walt.foreignpolicy.com/posts/..._as_we_know_it

[Armanen]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Germany After the EU and the Russian Scenario

Discussions about Europe currently are focused on the Greek financial crisis and its potential effect on the future of the European Union. Discussions these days involving military matters and Europe appear insignificant and even anachronistic. Certainly, we would agree that the future of the European Union towers over all other considerations at the moment, but we would argue that scenarios for the future of the European Union exist in which military matters are far from archaic.

Russia and the Polish Patriots
For example, the Polish government recently announced that the United States would deploy a battery of Patriot missiles to Poland. The missiles arrived this week. When the United States canceled its land-based ballistic missile defense system under intense Russian pressure, the Obama administration appeared surprised at Poland’s intense displeasure with the decision. Washington responded by promising the Patriots instead, the technology the Poles had wanted all along. While the Patriot does not enhance America’s ability to protect itself against long-range ballistic missiles from, for example, Iran, it does give Poland some defense against shorter-ranged ballistic missiles and substantial defense against conventional air attack.




Russia is the only country capable of such attacks on Poland with even the most distant potential interest in doing so, and at this point, this is truly an abstract threat. In removing a system that was really not a threat to Russian interests — U.S. ballistic missile defense at most can handle only a score of missiles, meaning it would have a negligible impact on the Russian nuclear deterrent — the United States ironically has installed a system that could affect Russia. Under the current circumstances, this is not really significant. While much is being made of having a few U.S. boots on the ground east of Germany within 40 kilometers (about 25 miles) of the Russian Baltic exclave of Kaliningrad, a few hundred technicians and guards are simply not an offensive threat.




Still, the Russians — with a long history of seeing improbable threats turning into very real ones — tend to take hypothetical limits on their power seriously. They also tend to take gestures seriously, knowing that gestures often germinate into strategic intent. The Russians obviously oppose this deployment, as the Patriots would allow Poland in league with NATO — and perhaps even by itself — to achieve local air superiority. There are many crosscurrents in Russian policy, however.




For the moment, the Russians are interested in encouraging better economic relations with the West, as they could use technology and investment that would make them more than a commodity exporter. Moreover, with the Europeans preoccupied with their economic crisis and the United States still bogged down in the Middle East and needing Russian support on Iran, Moscow has found little outside resistance to its efforts to increase its influence in the former Soviet Union. Moscow is not unhappy about the European crisis and wouldn’t want to do anything that might engender greater European solidarity. After all, a solid economic bloc turning into an increasingly powerful and integrated state would pose challenges to Russia in the long run that Moscow is happy to do without. The Patriot deployment is a current irritation and a hypothetical military problem, but the Russians are not inclined to create a crisis with Europe over it — though this doesn’t mean Moscow won’t make countermoves on the margins when it senses opportunities.




For its part, the Obama administration is not focused on Poland at present. It is obsessed with internal matters, South Asia and the Middle East. The Patriots were shipped based on a promise made months ago to calm Central European nerves over the Obama administration’s perceived lack of commitment to the region. In the U.S. State and Defense department sections charged with shipping Patriots to Poland, the delivery process was almost an afterthought; repeated delays in deploying the system highlighted Washington’s lack of strategic intent. It is therefore tempting to dismiss the Patriots as of little importance, as merely the combination of a hangover from a Cold War mentality and a minor Obama administration misstep. Indeed, even a sophisticated observer of the international system might barely note it. But we would argue that it is more important than it appears precisely because of everything else going on.

Existential Crisis in the EU
The European Union is experiencing an existential crisis. This crisis is not about Greece, but rather, what it is that members of the European Union owe each other and what controls the European Union has over its members. The European Union did well during a generation of prosperity. As financial crisis struck, better-off members were called on to help worse-off members. Again, this is not just about Greece — the 2008 credit crisis in Central Europe was about the same thing. The wealthier countries, Germany in particular, are not happy at the prospect of spending taxpayer money to assist countries dealing with popped credit bubbles. They really don’t want to do that, and if they do, they really want to have controls over the ways these other countries spend their money so this circumstance doesn’t arise again. Needless to say, Greece — and countries that might wind up like Greece — do not want foreign control over their finances.




If there are no mutual obligations among EU member nations, and the German and Greek publics don’t want to bail out or submit, respectively, then the profound question is raised of what Europe is going to be — beyond a mere free trade zone — after this crisis. This is not simply a question of the euro surviving, although that is no trivial matter. The euro and the European Union will probably survive this crisis — although their mutual failure is not nearly as unthinkable as the Europeans would have thought even a few months ago — but this is not the only crisis Europe will experience. Something always will be going wrong, and Europe does not have institutions that could handle these problems.




Events in the past few weeks indicate that European countries are not inclined to create such institutions, and that public opinion will limit European governments’ ability to create or participate in these institutions. Remember, building a super state requires one of two things: a war to determine who is in charge or political unanimity to forge a treaty. Europe is — vividly — demonstrating the limitations on the second strategy. Whatever happens in the short run, it is difficult to envision any further integration of European institutions. And it is very easy to see how the European Union will devolve from its ambitious vision into an alliance of convenience built around economic benefits negotiated and renegotiated among the partners. It would thus devolve from a union to a treaty, with no interest beyond self-interest.

The German Question Revisited
We return to the question that has defined Europe since 1871, namely, the status of Germany in Europe. As we have seen during the current crisis, Germany is clearly the economic center of gravity in Europe, and this crisis has shown that the economic and the political issues are very much one and the same. Unless Germany agrees, nothing can be done, and if Germany so wishes, something will be done. Germany has tremendous power in Europe, even if it is confined largely to economic matters. But just as Germany is the blocker and enabler of Europe, over time that makes Germany the central problem of Europe.




If Germany is the key decision maker in Europe, then Germany defines whatever policies Europe as a whole undertakes. If Europe fragments, then Germany is the only country in Europe with the ability to create alternative coalitions that are both powerful and cohesive. That means that if the European Union weakens, Germany will have the greatest say in what Europe will become. Right now, the Germans are working assiduously to reformulate the European Union and the eurozone in a manner more to their liking. But as this requires many partners to offer sovereignty to German control — sovereignty they have jealously guarded throughout the European project — it is worth exploring alternatives to Germany in the European Union.




For that we first must understand Germany’s limits. The German problem is the same problem it has had since unification: It is enormously powerful, but it is far from omnipotent. Its very power makes it the focus of other powers, and together, these other powers can cripple Germany. Thus, Germany is indispensable for any decision within the European Union at present, and it will be the single center of power in Europe in the future — but Germany can’t just go it alone. Germany needs a coalition, meaning the long-term question is this: If the EU were to weaken or even fail, what alternative coalition would Germany seek?




The casual answer is France, as the two economies are somewhat similar and the countries are next-door neighbors. But historically, this similarity in structure and location has been a source not of collaboration and fondness but of competition and friction. Within the European Union, with its broad diversity, Germany and France have been able to put aside their frictions, finding a common interest in managing Europe to their mutual advantage. That co-management, of course, helped bring us to this current crisis. Moreover, the biggest thing that France has that Germany wants is its market; an ideal partner for Germany would offer more. By itself at least, France is not a foundation for long-term German economic strategy. The historic alternative for Germany has been Russia.

The Russian Option
A great deal of potential synergy exists between the German and Russian economies. Germany imports large amounts of energy and other resources from Russia. As mentioned, Russia needs sources of technology and capital to move it beyond its current position of mere resource exporter. Germany has a shrinking population and needs a source of labor — preferably a source that doesn’t actually want to move to Germany. Russia’s Soviet-era economy continues to de-industrialize, and while that has a plethora of negative impacts, there is one often-overlooked positive: Russia now has more labor than it can effectively metabolize in its economy given its capital structure. Germany doesn’t want more immigrants but needs access to labor. Russia wants factories in Russia to employ its surplus work force, and it wants technology. The logic of the German-Russian economic relationship is more obvious than the German-Greek or German-Spanish relationship. As for France, it can participate or not (and incidentally, the French are joining in on a number of ongoing German-Russian projects).




Therefore, if we simply focus on economics, and we assume that the European Union cannot survive as an integrated system (a logical but not yet proven outcome), and we further assume that Germany is both the leading power of Europe and incapable of operating outside of a coalition, then we would argue that a German coalition with Russia is the most logical outcome of an EU decline.




This would leave many countries extremely uneasy. The first is Poland, caught as it is between Russia and Germany. The second is the United States, since Washington would see a Russo-German economic bloc as a more significant challenger than the European Union ever was for two reasons. First, it would be a more coherent relationship — forging common policies among two states with broadly parallel interests is far simpler and faster than doing so among 27. Second, and more important, where the European Union could not develop a military dimension due to internal dissensions, the emergence of a politico-military dimension to a Russo-German economic bloc is far less difficult to imagine. It would be built around the fact that both Germans and Russians resent and fear American power and assertiveness, and that the Americans have for years been courting allies who lie between the two powers. Germany and Russia would both view themselves defending against American pressure.




And this brings us back to the Patriot missiles. Regardless of the bureaucratic backwater this transfer might have emerged out of, or the political disinterest that generated the plan, the Patriot stationing fits neatly into a slowly maturing military relationship between Poland and the United States. A few months ago, the Poles and Americans conducted military exercises in the Baltic states, an incredibly sensitive region for the Russians. The Polish air force now flies some of the most modern U.S.-built F-16s in the world; this, plus Patriots, could seriously challenge the Russians. A Polish general commands a sector in Afghanistan, something not lost upon the Russians. By a host of processes, a close U.S.-Polish relationship is emerging.




The current economic problems may lead to a fundamental weakening of the European Union. Germany is economically powerful but needs economic coalition partners that contribute to German well-being rather than merely draw on it. A Russian-German relationship could logically emerge from this. If it did, the Americans and Poles would logically have their own relationship. The former would begin as economic and edge toward military. The latter begins as military, and with the weakening of the European Union, edges toward economics. The Russian-German bloc would attempt to bring others into its coalition, as would the Polish-U.S. bloc. Both would compete in Central Europe — and for France. During this process, the politics of NATO would shift from humdrum to absolutely riveting.




And thus, the Greek crisis and the Patriots might intersect, or in our view, will certainly in due course intersect. Though neither is of lasting importance in and of themselves, the two together point to a new logic in Europe. What appears impossible now in Europe might not be unthinkable in a few years. With Greece symbolizing the weakening of the European Union and the Patriots representing the remilitarization of at least part of Europe, ostensibly unconnected tendencies might well intersect.


Source: http://www.stratfor.com/weekly/20100...sian_scenario?

[Armanen]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Russia and Germany, two nations that fought two genocidal wars against each other within a time-span of just one generation, maybe actually be heading towards a genuine partnership. While the political system in Germany had been held hostage for several decades, it is no secret that German Chancellors Schroeder and Merkel have made great strides in German politics by pursuing better relations with Russia during the past several years. Schroeder and Merkel have both enjoy exceptionally warm relations with Vladimir Putin. Germany has recently struck long-term energy deals with Moscow. Bilateral trade between Germany and Russia continues to grow. Merkel was sitting next to Putin during the Victory Day celebrations in Moscow.


Washington may be slowly losing its iron grip over Berlin. As German and American officials are increasingly finding themselves on opposing sides of political and financial matters, Berlin and Moscow are finding themselves agreeing on an increasing number of issues. Although Germany was systematically defanged after its defeat by the Bolsheviks and the Anglo-American empire during the mid-twentieth century, it nevertheless continues to be an economic superpower. Moreover, Germany, along with France, has been, is and will continue to be, the heart and soul of modern Europe. Thus, there is great cause for concern in Washington.


The historic hate that certain circles in the West feel towards Germany is beginning to reveal itself once again. New York Times editors could not contain their virulent anti-German rhetoric in one of their recent editorials curiously titled "Germany vs. Europe" (piece posted below). According to this New York Times commentary, "Germany is turning to nationalist illusions" simply because Berlin no longer wants to play ball with the bloodthirsty criminals in suits on Wall Street and in Washington. Chancellor Merkel has also made some candid comments about the West's financial system as of late. According to The Telegraph, a major British news agency, Chancellor Merkel is reported to have made the following comment recently:


"First the banks failed, forcing states to carry out rescue operations. They plunged the global economy over the precipice and we had to launch recovery packages, which increased our debts, and now they are speculating against these debts. That is very treacherous."


German Chancellor Angela Merkel

During the past several years we have seen the merging of interests between the top three nations of Eurasia: Germany, Russia and China. Had it not been for their pathetic president, France could have been a part of this Eurasian equation as well. In my opinion, there is still hope for France, but first they need to get rid of their Sarkozy clown. Nevertheless, regardless of what happens between Germany and Russia and China, the writing is clearly on the wall: the global order which was put in place during the second half of the twentieth century is gradually crumbling. A new political/financial order will eventually evolve into existence. The Victory Day parade in Moscow on May 9 may have actually heralded the emerging new face of the new political order. The most fascinating aspect of watching the impressive military display on hand in Moscow, the heart of Eurasia, was watching the leaders of Germany, Russia and China sitting side-by-side.


Arevagal

[Armanen]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Putin’s Grasp of Energy Drives Russian Agenda

The titans of Russia’s energy industry gathered around an enormous map showing the route of a proposed new pipeline in Siberia. It would cost billions and had been years in the planning. After listening to their presentation, President Vladimir V. Putin frowned, got up from his chair, whipped out a felt pen and redrew the map right in front of the embarrassed executives, who quickly agreed that he was right. The performance, which was carried on state television in 2006, was obviously stage managed, but there was nothing artificial about its point. It was a typical performance for a leader who has shown an uncanny mastery of the economics, politics and even technical details of the energy business that goes well beyond a politician taking an interest in an important national industry.



“I would describe it as very much his personal project,” said Clifford G. Gaddy, a senior fellow at the Brookings Institution in Washington and an expert in Russia’s energy policy. “It is the heart of what he has done from the very beginning.”



Indeed, from his earliest days in power in 2000, Mr. Putin, who left the presidency in 2008 and became prime minister, decided natural resource exports and energy in particular would not only finance the country’s economic rebirth but also help restore Russia’s lost greatness after the collapse of the Soviet Union. Just this month, Mr. Putin’s personal immersion in the topic was on full display as he ordered natural gas shut off to Ukraine, in the process cutting supplies to Europe. It was portrayed by the Kremlin as a protracted commercial dispute with Ukraine. But the hundreds of thousands of shivering gas customers in the Balkans and Eastern Europe sent an unmistakable message about the Continent’s reliance on Russian supplies — and Mr. Putin’s willingness to wield energy as a political weapon. When talking about energy, he often rattles off obscure statistics not often heard outside a Houston boardroom, like average daily production of fields and throughput capacity of pipelines.



Mr. Putin “clearly knows as much about BP’s business in Russia as I do,” Anthony B. Hayward, BP’s chief executive, once said after a meeting with him. In fact, the standoff in Ukraine was just one part of a far larger Russian playbook on natural gas policy under Mr. Putin. In the past year, Russia has formed a cartel-like group with Middle Eastern nations with the goal of dampening global competition in natural gas, sewn up sources of supply in Central Asia and North Africa with long-term contracts to thwart competitors and used its military to occupy an important pipeline route in Georgia. And this broader struggle extends over a dozen countries from Azerbaijan to Austria. In its sprawl and slow pace, it is often compared to the 19th-century struggle for colonial possession in Central Asia known as the Great Game. In the modern variant, Mr. Putin, a master strategist, has proved far more effective than his European counterparts.



“He has been thinking for some time, ‘What are the means and tools at Russia’s disposal, to make Russia great?’ ” said Lilia Shevtsova, a researcher at the Carnegie Moscow Center. In the post-Soviet world, she said, Mr. Putin concluded that “military power would no longer be sufficient.”



A spokesman for Mr. Putin, Dmitri S. Peskov, said that the energy market “was, is and will remain a strategic sphere for Russia” and that government leaders in Moscow should be versed in the topic. Mr. Peskov denied the Kremlin used exports for political purposes. Of Mr. Putin’s deep personal knowledge of the business, he said the prime minister showed a similar attention to detail in other matters, too. In this contest, Russia’s overarching goal is to prevent the West from breaking a monopoly on natural gas pipelines from Asia to Europe. Boris E. Nemtsov, a former Russian first deputy prime minister who is now in the opposition, said: “It is the typical behavior of the monopolist. The monopolist fears competition.”



As they did two years ago after a similar supply disruption, European officials have promised in the wake of the Ukraine dispute to take steps to diversify the Continent’s sources of gas to end its reliance on Russia, which supplies nearly 30 percent of the total. European dependence is expected to grow as North Sea gas fields decline. At a conference in Budapest on Tuesday, Prime Minister Mirek Topolanek of the Czech Republic called for a renewed effort to build the long-delayed Nabucco pipeline to bring Central Asian gas to Europe without passing through Russian territory. But there is a reason the project has never gotten off the ground: as determined as Europe is to end its reliance on Russian gas, Mr. Putin is equally adamant about extending it.



The Nabucco pipeline was proposed in 2002 by executives from European energy companies with the express intent of undercutting Russia’s gas monopoly. It would pass through Turkey and Georgia to the Caspian Sea. Under the best of circumstances, building an international pipeline is an intricate and arduous process, technically, financially and politically. However, Nabucco’s planners rapidly discovered that their biggest obstacle was not a mountain chain or a corrupt local politician, but Mr. Putin himself. When OMV, the Austrian energy company, formally created a consortium for Nabucco in 2005, he responded with a competing idea: a pipeline called South Stream that would terminate at the same gas storage site in Austria, but originate in Russia and bypass Ukraine by traveling under the Black Sea.



In a contest often compared to chess, this Russian countermove, like all good chess moves, was both offensive and defensive. To pay the hefty upfront construction costs, a pipeline needs both an assured source of supply and a market for the gas it transports. The South Stream pipeline would flood the gas market in southeastern Europe, locking up the customers the bankers behind Nabucco were counting on to finance the project. At the same time it would undermine Ukraine’s domination of gas lines headed west, one of the biggest obstacles to Russian domination of the European gas market. But Mr. Putin did not stop there. Leaving nothing to chance, he also took steps to choke off potential sources of upstream gas supplies deep in Central Asia.



The race to secure these rich sources of natural gas unexpectedly accelerated in 2006 with the death of the eccentric and isolationist dictator of Turkmenistan, Saparmurat Niyazov. While energy executives around the world rushed to Ashgabat, the Turkmen capital, to meet the new leader, Gurbanguly Berdymukhammedov, a former dentist, Mr. Putin was the first to cut a big deal. Smiling and holding shovels at a televised ceremony to mark the start of construction, Mr. Putin and Mr. Berdymukhammedov agreed in 2007 to build a pipeline north, to Russia, depriving Nabucco of potential supply. It was not until 2008 that European Union officials got to Ashgabat with a memorandum of understanding for a trans-Caspian pipeline that could link to Nabucco. It has yet to be acted upon.



Farther west, it was the same story. In February 2008, Mr. Putin signed an agreement with Bulgaria — over the objections of the United States and in spite of Bulgaria’s status as a new NATO member — making it a partner in the South Stream pipeline. And in April 2008, Mr. Putin was in Athens, cutting a deal for a spur of South Stream. In this flurry of diplomacy he again beat his Western opponents. The United States State Department’s point man on Eurasian pipelines, Matthew J. Bryza, in Athens the next day, could only rue the signed deal. Mr. Bryza was left explaining to the Greeks: “If you have only one supplier of feta, you’re in a vulnerable position. The same for gas.” The West still had an important pipeline partner in Georgia, a critical geographical link. But that all but evaporated in the brief war last summer.



By 2007, a pipeline section had been laid across Georgia, the Baku-Erzurum pipeline, which is now used for local distribution but will become a part of the Nabucco pipeline, if it is ever built. This brought the struggle for Nabucco to a pivotal stage, for it was now playing out along a storied trade route in the petroleum business, and one highly sensitive to the Russians. In the 19th century the Rothschild banking family and the Nobel brothers of Sweden had built a railroad and pipeline across Georgia to sell Baku oil, undercutting the near monopoly in the business, Standard Oil of the United States, which was supplying Europe with kerosene produced in America.



After the breakup of the Soviet Union, the revival of this pre-Bolshevik energy corridor became a major foreign policy goal of the United States, intended to strengthen the economic independence of former Soviet states and diversify world oil supplies away from the Middle East. At a narrow point, the pipeline route passes just south of the Russian-controlled enclave of South Ossetia and north of another Russian ally, Armenia. The August war sent a chill through boardrooms in the West when, for example, Russian tanks scurried back and forth over one of the buried pipelines and one crew occupied a pumping station. Russia, said Svante Cornell, a specialist on Central Asia and the Caucasus at the School for Advanced International Studies at Johns Hopkins University, sent a simple message: “We can blow this up at any time.”



While his track record is very strong, Mr. Putin is not infallible. Last summer he made a rare mistake by locking in long-term contracts for Central Asian gas at close to the height of the market — $340 for 1,000 cubic meters in 2009. While Mr. Putin achieved his goal of depriving Nabucco of more potential sources, Russia is now selling that gas in a down market to Ukraine for an average of less than $240 per 1,000 cubic meters — one possible reason, energy experts have said, that Mr. Putin tried to force Ukraine to pay more for gas this winter. Despite its best intentions, Europe is likely to remain dependent on Russian energy supplies for the foreseeable future and, perhaps, indefinitely if Mr. Putin has his way. And that reflects his long-held beliefs.



As far back as 1997, while serving as deputy mayor of St. Petersburg, Mr. Putin earned a graduate degree in economics, writing his thesis on the economics of natural resources. Later, when scholars at the Brookings Institution analyzed the text, they found 16 pages had been copied without attribution from a 1978 American business school textbook called “Strategic Planning and Policy,” by David I. Cleland and William R. King of the University of Pittsburgh. Mr. Putin has declined to comment on the allegation. Tellingly, the passages they say were plagiarized relate to the indispensable role of a chief executive in planning within a corporation — the need for one man to have strategic vision and control.



Source: http://www.nytimes.com/2009/01/29/wo...tml?ref=europe

[Armanen]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Russia, Turkey: A Grand Energy Bargain?

Russian President Dmitri Medvedev paid a visit to Turkey on May 11-12, during which he signed agreements for $25 billion in projects — mostly in the energy sector — including a massive commitment to build a $20 billion, 4.8-gigawatt (GW) nuclear power plant. Medvedev’s visit is the culmination of months of negotiations between Ankara and Moscow over where the countries could agree to disagree on the future of Eurasian energy flows.

Turkey, straddling Europe, Asia and the Middle East, is looking to bolster its geopolitical standing by signing deals that would allow Turkey to transit energy from the East to the European markets. Russia, as the dominant natural gas supplier for Europe, wants to ensure Turkey does not give Europe too many options in circumventing Russian energy networks. Since Russia and Turkey are both resurgent powers in the region, the energy issue can turn quite thorny at times, particularly as the West is leaning on Turkey to keep its distance from Moscow. But Russia and Turkey are not looking for an energy brawl at the moment. Tensions exist between these historic rivals, but the current geopolitical environment is pushing the two sides to work with — instead of against — each other.

Competing Over Azerbaijan

Azerbaijan has long been a pawn in Turkey’s negotiations with Russia. The country shares deep cultural and linguistic linkages to Turkey, and already transports roughly 9 billion cubic meters (bcm) of natural gas per year for the Baku-Tbilisi-Erzerum pipeline, which circumvents Russia and carries natural gas from Azerbaijan’s offshore Shah Deniz fields through Georgia to Turkey for the European market. Phase II of Azerbaijan’s Shah Deniz project is expected to come online in 2018 and produce 15 bcm per year, 12 bcm of which would be available for export. Turkey wants to secure as much of that remainder for export as possible so it can transit substantial amounts of natural gas through its territory for projects like the much-touted Nabucco pipeline, designed to provide Europe with a non-Russian-influenced natural gas alternative. Russia, which has a strategic interest in maintaining an energy stranglehold on Europe, naturally wants to ensure pipeline projects such as Nabucco remain pipe dreams.

Such an opportunity arose for Russia roughly two years ago when Turkey began pursuing a diplomatic rapprochement with Azerbaijan’s biggest foe, Armenia. Azerbaijan was deeply offended that Turkey would try to make nice with Armenia without first ensuring Azerbaijani demands were met on Nagorno-Karabakh, a disputed territory that Armenia seized from Azerbaijan in a war in the early 1990s. As Turkish-Azerbaijani relations deteriorated, Russia made sure it was there for Baku in its time of need, giving Moscow the leverage it was seeking over issues such as Shah Deniz II pricing agreements. So, whenever Turkey approached Baku for a pricing deal on Shah Deniz II, Russia would outbid the Turks and the Azerbaijanis would continue to hold out on a deal. At the same time, Russia used its clout over Armenia to ensure that Turkish-Armenian negotiations remained deadlocked.

In the days leading up to Medvedev’s visit to Turkey, however, signs of progress between Turkey and Azerbaijan over Shah Deniz II started coming to light. Azerbaijani Energy Minister Natik Aliyev announced May 5 that Turkey and Azerbaijan were coming close to a final pricing agreement to supply Turkey with a minimum of 7 bcm of natural gas from Shah Deniz II. According to a STRATFOR source, Turkish Prime Minister Recep Tayyip Erdogan has thus far made a verbal agreement with an advisor to Azerbaijani President Ilham Aliyev for Turkey to pay around $220-270 per thousand cubic meters. This starting price is considerably lower than the Russians’ earlier offer of $300 per thousand cubic meters. It is unlikely to be a coincidence that these negotiations picked up just prior to Medvedev’s visit. If Baku was moving forward with Ankara on a Shah Deniz II deal, the Russians likely facilitated these negotiations.

Nabucco On The Back Burner

However, this assistance came at a price. Russia does not want Azerbaijan’s natural gas to go toward a pipeline project like Nabucco that directly violates Russian energy imperatives. That said, there are signs that Russia may be willing to let a bit of its energy stranglehold over Europe slip if, in return, it can more firmly entrench itself in Turkey, the crucial link to Europe’s energy diversification efforts. According to a STRATFOR source, Russia has given its consent for now to the Turkey-Azerbaijan natural gas deal on the condition that the massive Nabucco project be shelved. The source claims Russia and Turkey have agreed for the time being that Turkey will focus its attention on another, smaller pipeline to carry the extra Azerbaijani natural gas: the Interconnection Turkey-Greece-Italy (ITGI) and Poseidon pipeline project. This pipeline would take Azerbaijani natural gas across Georgia and Turkey (through an existing Baku-Tbilisi-Erzerum pipeline) into Greece, and from there into Italy through an underwater pipeline across the Ionian Sea. The ITGI-Poseidon project would have a capacity of 11.8 bcm per year compared to Nabucco’s capacity goal of 31 bcm per year. This difference in market share makes ITGI-Poseidon a more acceptable compromise for the Russians. Moreover, there is potential down the road for Russia to link into this pipeline project through its ambitious South Stream project led by Russian natural gas giant Gazprom, which aims to deliver Russian energy supplies to Europe across the Black Sea.

The ITGI project — priced at roughly $507 million — would be far more cost effective than Nabucco, the total estimated cost of which is as high as $11 billion. The ITGI project is also already under way, with the Greece-Turkey connection having come online in early 2007. Under the European Economic Recovery Plan (EERP), the European Union has also pledged a grant of $126.9 million for the final section of the project, the Poseidon pipeline. It remains to be seen whether Turkey will be able to convince its European partners, now struggling with the Greek financial maelstrom, to put down more money to see through this project, as well as others such as Nabucco in the future. However, Turkey will be able to make a much more convincing argument for more funding if it can secure Azerbaijani natural gas to source these projects.

Azerbaijan’s Demands

Azerbaijan’s demands in this whole affair are quite simple. Baku wants a favorable price on its natural gas, but is also looking for guarantees from Ankara that the Turkish government will not pursue meaningful peace talks with Armenia without first addressing Azerbaijani concerns over Nagorno-Karabakh. Given that the Turkey-Armenia talks have been deadlocked since early spring, Turkey likely has the diplomatic bandwidth to offer such guarantees in the interest of securing this natural gas deal and mending its relationship with Azerbaijan.

Unprecedented Deal-Making?

Russia had to have a strategic purpose for it to start easing its grip on the Shah Deniz II negotiations between Turkey and Azerbaijan. That strategic purpose may have manifested itself during Medvedev’s May 12 visit to Turkey. During that visit, two significant energy deals were signed that signaled Russian-Turkish energy integration on an unprecedented scale. The first deal was for the construction of Turkey’s first nuclear power plant by a Russian-led consortium led by Atomstroyexport and Inter RAO. The power plant will have four reactors with a total capacity 4.8 GW and cost roughly $20 billion. The scale of this project cannot be emphasized enough. If this nuclear power plant is built, Turkey will be home to one of the largest nuclear energy installations in the world. Russia has not even built a nuclear power plant on this scale for itself, and does not have a reputation for providing the necessary funding to bring such projects into realization.

STRATFOR sources, however, claim many of the details of the deal have been worked out. Russia will have a controlling stake in the plant and sell the rest (up to 49 percent) to other investors, most likely Turkish firms such as AKSA, which has strong political and family ties to Erdogan and the ruling Justice and Development Party. The plant will likely be built in two stages; two reactors built, followed by the second two. The construction for the power plant near Turkey’s southern Mediterranean coastal town of Akkuyu is expected to take seven years, and can only begin after both parliaments ratify the agreement.

Instead of having Turkey pay a large amount of money up front, Turkish electricity firm TEDAS has signed an agreement to buy electricity from the plant for a minimum of 15 years, allowing Turkey to pay for the construction in installments once the plant becomes operational. Russia is expected to use this 15-year guarantee to secure loans for the project. Turkey will also have to rely on Russia for maintenance and the technological components for the plant, giving Moscow the long-term leverage it has been seeking in the Turkish energy sector. Still, $20 billion is an enormous sum, and STRATFOR remains deeply skeptical as to whether Russia will indeed follow through with its financial commitment to get this project off the ground. If it does, this project would signify a sea change in Russian investment behavior. It would also raise questions as to where else Russia could put its money in pursuit of its strategic energy goals.

Another agreement was signed for Russia to supply a pipeline that would pump Russian oil from the Black Sea port of Samsun in northern Turkey to the Ceyhan oil terminal in southern Turkey on the Mediterranean coast. Turkish firm Calik Energy (which has close ties to the AKP government) and Italian firm ENI (which has close ties to Russian energy giant Gazprom) are building the pipeline, which will have a capacity of between 1.2 million and 1.4 million barrels per day. Russian Deputy Prime Minister Igor Sechin said the Samsun-Ceyhan deal would cost $3 billion, and STRATFOR sources claim Calik Energy will be responsible for financing most of the deal. The purpose of this north-south pipeline is to alleviate the heavy congestion of oil tankers traveling through the Bosporus and Dardanelles straits to travel between the Black and Mediterranean seas, an issue Turkey and international energy firms have been grappling with for some time. The main purpose of the pipeline will be to decrease traffic of the larger 350,000-400,000-ton tankers and free up the straits for the 150,000-ton tankers. The economic viability of this pipeline has long been in question, however, given that transit through the Bosporus and Dardanelles is free by law. It thus remains to be seen what economic incentives will be given for tankers to bring oil to Samsun port to be transported through the Samsun-Ceyhan pipeline. Turkey already imports more than 60 percent of its energy supplies from Russia, and that energy dependence will deepen if this pipeline becomes operational.

Nothing Firm Yet

STRATFOR will thus be closely watching the Turkish-Russian nuclear power and Samsun-Ceyhan agreements, as well as whether Turkey and Azerbaijan will strike a deal over Shah Deniz II in the coming days, as officials on both sides have been claiming. Any of these deals would only be sealed under a broader understanding between Moscow and Ankara. Yet each of these deals also comes with substantial caveats. In addition to the economic feasibility issues attached to the nuclear power plant and Samsun-Ceyhan pipeline deals, a potential Shah Deniz II deal would likely contain a number of loopholes. For example, Turkey can assure Russia right now that the extra natural gas it receives from Azerbaijan will not go toward Nabucco, and then divert the natural gas toward whatever project it chooses down the line. By the same token, Russia can facilitate negotiations between Turkey and Azerbaijan over Shah Deniz II right now to secure the energy deals it wants with Turkey on nuclear power and natural gas supplies, but can also use its influence with Azerbaijan to scuttle the Shah Deniz II deal between Ankara and Baku at a later point in time. Nothing is set in stone in this flurry of pipeline politics, but for now, Russia and Turkey appear to be working toward a mutual energy understanding.

Source: http://blogs.forbes.com/energysource...nergy-bargain/

[Armanen]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Nord Stream Takes Shape: A Big Victory For Russia

Gimme Fuel: $11 billion pipeline launched, EU to get gas directly via Nord Stream: http://www.youtube.com/watch?v=kT0Xd...layer_embedded


Russian President Medvedev inaugurated the construction of the controversial undersea natural gas pipeline system Nord Stream on 9 April 2010. The geo-political importance of Nord Stream cannot be overestimated. With the construction of the pipeline, Europe and Russia will be tied to each other even more closely. Russia will get a direct link with Western Europe without transit through Eastern Europe. Russia already meets a quarter of Europe’s energy needs. Nord Stream will increase European dependence on Russian natural gas further. Russia presently supplies about 140 billion cubic metre (bcm) of gas every year to Europe. Nord Stream will add up to 55 bcm per year to this capacity.

The gas will be supplied via two parallel steel pipelines of 27.5 bcm/year capacity each. The length of this under sea pipeline is 1220 km. It will begin at Vyborg in Russia near St. Petersburg, cut across the Baltic Sea (maximum depth 210 metres) and reach Greifswald in Germany. It will cost about US $12 billion to build and will be ready to deliver gas by 2012. It will be the largest underwater gas pipeline system when built. The pipeline will pass through the territorial waters and/or economic zones of Russia, Finland, Sweden, Denmark and Germany. Several side pipelines will be built in different countries to connect with the main pipeline.

The pipeline, discussions about which began in 1997, is an outcome of the strong commitment from former German Chancellor Gerhard Schroder and Vladmir Putin, the former President and current Prime Minister of Russia. Schroeder is presently the chairperson of the Shareholders’ Committee. The strongest objection for the pipeline has come from Poland. In 2006, the Polish defence minister compared the agreement between Russia and Germany with the 1939 Nazi-Soviet Pact. There have also been apprehensions that the pipeline may be misused by Russia for spying purposes. Russia has dismissed these allegations as unfounded. Countries like Ukraine, Poland and Belarus stand to lose US $1 billion per year in transit fees when the pipeline is constructed.

Thirty per cent of the funding for the project will be provided from the equity holdings while the rest will be raised by various banks. Several European banks have joined the project to raise funds. Nord Stream is a truly pan-European project in which a large number of companies are joining hands. Russia’s Gazprom holds 51 per cent of shares in Nord Stream AG, Germany’s Wintershall and E.ON Ruhrgas hold 20 per cent each, and the Netherlands’ Gasunie holds 9 per cent. These companies have wide experience in building and operating natural gas pipeline projects around the world. Some other companies are expected to join the project. The equity holding pattern will change in future as more companies join the project. Already funding to the tune of US $4 billion has been raised from 22 banks.

The project will supply Russian gas to Germany, France, Denmank, Belgium and the Netherlands. Eventually a pipeline may be built to connect the United Kingdom also. The pipeline will help Russia diversify its routes and Russia’s dependence upon Ukraine for supply of gas to Europe will reduce. The recipient countries will be freed from supply disruptions caused by Russian-Ukrainian spats in the last few years. This factor alone has compelled Germany to back the pipeline project. Nord Stream will get its gas supples from Yuzhno-Russkoye gas field which has an proven gas reserves of 700 bcm and estimated reserves of one trillion bcm. The fields in the Yamal peninsula, Ob-Taz bay and Shtokman gas fields will also be added. These are some of Russia’s largest gas fields.

The project will change the nature of Russian-European relations. It is hoped that energy interdependence will forge better ties between the EU and Russia. Nord Stream is crucial for Europe’s energy security. Europe currently needs about 543 bcm of gas annually. This will go up to 629 bcm by 2025. Eighty one percent of this will have to be imported. Nord Stream will meet about 25 per cent of the projected growth in Europe’s gas imports. No wonder the project is listed as a priority project in EU’s Trans-Europe Energy Network (TEN - E).

Despite the beginning of the construction of the pipeline environmental concerns remain. The Baltic Sea is considered to be one of the most polluted seas in the world. Chemical and conventional munitions were dumped into the Baltic Sea after the two world wars. Several surveys have been carried out in the past to map the sites where such munitions may be lying. The pipeline route seeks to avoid sensitive sites. The concern is that construction activities in the sea may stir up the toxic waste in the Baltic Sea. Russia has said that the environmental impact studies done for the Nord Stream show that the pipeline is safe. Finland would not allow any construction ships to anchor in its economic zone. The pipeline project has obtained safety and environmental clearances from the concerned countries and agencies but environmental NGOs like WWF have criticised the environmental impact clearances obtained as inadequate.

Doubts have also been expressed about the economic viability of the project. Will it deliver Russian gas to European customers at an affordable price? Despite these apprehensions, Nord Stream should come as a great relief to energy starved Europe. Europe is looking for alternative non-Russian sources of energy supply as well. The Nabucco project is one such project aimed at delivering gas from Central Asia to Europe. Russia’s counter to Nabucco project is the South Stream project through the Black Sea into Southern Europe. It may be noted that together Nord Stream and South Stream gas pipelines will equal the gas pipeline capacity of the Russia-Ukraine-Europe system.

Russia is no doubt an energy super power. The dependence of individual European countries on Russian gas varies from 21 per cent in the case of France and 43 per cent for Germany to 74 per cent for Austria, 79 per cent for Poland and 100 per cent in the case of Finland. This dependence is likely to continue in the foreseeable future. The Nord Stream Project will further strengthen Prime Minister Putin’s vision of positioning Russia as a major power in the world.

Source: http://www.eurasiareview.com/2010/04...ctory-for.html

[Armanen]

Re: The Rise of the Russian Empire: Russo-Armenian Relations

Putin Calls for Merger With Ukraine on Energy

Go with the Flow: Gas giants merger to warm up Russia-Ukraine ties? http://www.youtube.com/watch?v=z37Pz...layer_embedded



Prime Minister Vladimir V. Putin of Russia on Friday suggested merging Ukraine’s national energy company with the Russian gas giant Gazprom, a move that, if approved in Kiev, would put Ukraine’s strategic network of gas pipelines under Moscow’s control. Mr. Putin shocked many — including, apparently, his Ukrainian counterpart — by announcing the proposal at a news conference after talks in the Russian resort city of Sochi. The Ukrainian prime minister, Mykola Azarov, said through a spokesman that the idea of a merger had not come up in their meetings, and that Mr. Putin had “expressed it in an impromptu way.”
Mr. Putin’s idea is an audacious one politically, coming just two months after Ukraine elected a new president, Viktor F. Yanukovich, who vowed to increase cooperation with Russia. Emotions are still raw in Ukraine over a deal Mr. Yanukovich negotiated with Moscow to extend the lease on a Russian naval base on the Crimean Peninsula for 25 years, and a Tuesday vote on the issue in Parliament deteriorated into a melee.




Russia is heavily dependent on Ukrainian pipelines, which carry about 80 percent of its natural gas exports to Europe, and it has long coveted a greater degree of control over them. If the deal were to go through, Gazprom would effectively swallow the Ukrainian company, Naftogaz, said Chris Weafer, chief strategist at UralSib Capital, an investment bank. “In any merger, Gazprom would dominate — it would be seen as a complete Russian takeover over of the Ukrainian gas system,” Mr. Weafer said. If it came up for legislative approval, he added, what happened during the vote on the naval base “would look like a kindergarten party by comparison.” Mr. Weafer called Mr. Putin’s suggestion a “nonstarter,” but he said Mr. Putin could be laying the groundwork for the more politically viable approach of forming a joint venture that would control the Ukrainian pipeline system. “He’s probably trying out the extreme, knowing full well it would provoke a strong reaction inside Ukraine,” he said.




And that it did, in a country still split between its Europe-leaning west and Russia-leaning east. Yulia V. Tymoshenko, who lost to Mr. Yanukovich in a bitterly fought presidential race, said the merger proposal “could be seen as a joke” but warned of “a large-scale plan to liquidate independent Ukraine.” She predicted the “full absorption of Ukraine by Russia,” and blamed Mr. Yanukovich for ceding too easily to Russia’s will. “You can sculpt whatever you want out of plasticine Yanukovich,” she said, according to a statement posted on her party’s Web site. Mr. Yanukovich, a former Communist apparatchik who ran on a platform of closer ties to Moscow, has closed a series of agreements with the Kremlin since taking office, culminating Tuesday in the vote allowing Russia to extend its lease on the naval base. Russia, in return, agreed to cut the price of its natural gas by 30 percent — at a cost to Russia of at least $30 billion, Mr. Weafer said — and went on to waive a $2 billion fine it could have levied on Ukraine for purchasing less gas than was included in a contract signed in January.




The deals come at a critical time for Ukraine, whose economy has contracted precipitously in the downturn, with demand from industrial customers down by 50 percent during the first three months of the year compared with 2009. Dmitri S. Peskov, Mr. Putin’s spokesman, dismissed the notion that Gazprom would take over the smaller company, saying the proposal would create a new legal entity. He said that Ukraine was interested in finding a co-owner for Naftogaz, and that Russia sought to “receive a guaranteed route for the fulfillment of its obligations to customers in Western Europe.” He also said, in comments carried by RIA Novosti, that it was too early to speculate on a possible asset swap. The two countries’ energy ministers will meet with the companies’ top officials to discuss the proposal in mid-May. If the merger idea goes forward, it would reflect a regional trend that has emerged during the financial crisis, as Western banks pulled out of the region and former Soviet states turned to Moscow for capital and business ties.




During his comments in Sochi, Mr. Putin underlined the material support Russia has given Ukraine’s economy. “Thanks to the gas discount — I said this at the meeting with my colleagues — our neighbors will be able to invest more than $40 billion in their national economy over the next 10 years,” he said, in remarks carried on Russian television. The Russian proposal would also have implications for Europe, which has been paralyzed by winter stoppages in natural gas deliveries as Ukraine and Russia clashed over payments. The European Commission is likely to take a dim view of a merger because it would hamper efforts to draw Ukraine into its sphere of influence and away from Russia’s orbit.




Europe has heaped much of the blame for gas stoppages on Gazprom and the Kremlin. But it was unclear on Friday whether the commission had the means to intervene, or stymie, the Russian proposal. Part of the deal mooted by Mr. Putin involved lending Ukraine $500 million — a fact European Union officials are most likely to find galling, since they helped secure loans for Ukraine last year so it could pay its gas bills to Russia. Mr. Weafer said, though, that Europe might sign onto a joint venture plan, which would give Russia some equity in the pipeline system. Russia could then help modernize Ukraine’s pipeline system and use it to carry Central Asian gas into Europe. That arrangement, he added, could deal a death blow to Nabucco, a proposed pipeline that would transport Central Asian gas through Turkey into Austria, allowing Europe to reduce its dependence on Russian gas. As Ukraine considers Russia’s proposals, he noted, Moscow is pledging substantial sums. “They are getting what they want,” he said. “But they are paying for it.”


Source: http://www.nytimes.com/2010/05/01/wo...gazprom&st=cse

Russia and Norway Reach Accord on Barents Sea

The leaders of Russia and Norway on Tuesday resolved a 40-year-old dispute over dividing the Barents Sea and part of the Arctic Ocean into clear economic zones extending to the edge of Europe’s northern continental shelf. The agreement could herald oil and natural gas exploration in a huge and potentially lucrative region. “I believe this will open the way for many joint projects, especially in the area of energy,” President Dmitri A. Medvedev of Russia said at a news conference. The agreement is subject to ratification by by the legislature of each country. The Norwegian prime minister, Jens Stoltenberg, said it showed good will in the face of rising international anxiety over who controls the Arctic seabed, which by some estimates contains a quarter of the world’s undiscovered fossil fuels. “This is a confirmation that Norway and Russia, two large polar nations, do not have a policy about racing, but a policy about cooperation,” he said. When Russian scientists planted a flag on the seabed at the North Pole in 2007, it seemed that a “race to the Arctic” was on, with northern nations aggressively jostling for the right to exploit resources that were previously out of reach.



The chairman of Norway’s Ocean Futures research institute, Willy Ostreng, said the agreement’s foundation in international law and bilateral negotiation bodes well for resolving future conflicts between other countries in the far north, where interest in shipping and offshore petroleum production may intensify if the polar ice cap continues to recede in response to warming temperatures. “It’s a model case for what may happen in the future in the Arctic,” Mr. Ostreng said. The Norwegian and Russian frontiers cap Europe’s northernmost bulge. The new delimitation extends the two countries’ 122-mile land border northward beyond all the islands of the Barents Sea and into the Arctic Ocean, although the two leaders did not provide an exact northward distance. Conventional practice elsewhere in the world has been to position maritime boundaries at the midpoint between opposing land masses, and for 40 years that has been Norway’s goal with respect to its Svalbard archipelago to the west and the Russian island groups of Novaya Zemlya and Franz Josef Land to the east.




Russia argued instead for a “meridian line” boundary running more or less straight north from the mainland, which would have provided it with an additional 67,000 square miles of economic territory — about equal to the entire Norwegian sector of the North Sea, whose oil resources have made Norway a rich country. Mr. Stoltenberg said the line approved on Tuesday splits that disputed area nearly in half, which means the line will still run considerably closer to the Norwegian islands than the Russian ones. A number of oil or gas fields identified by Russian seismic surveys in the 1980s are thought to straddle the line. “Both parties believe the disputed area contains rich deposits of mineral resources, in particular oil and gas,” said Mr. Ostreng. “But they don’t know for sure. And when you don’t know for sure, you act as if the area is extremely rich. It is not easy to give up strategic resources.”





A spokesman for Greenpeace, the international environmental organization, said he was startled by how the two leaders talked about oil and gas exploration immediately after announcing the new boundary. “It just shows the greediness of Russia and Norway that the first thing they talked about is not global warming, which is what’s making this area suddenly accessible, but resource extraction,” said Truls Gulowsen, head of the group’s Norway branch. “This part of the planet is extremely sensitive. It is often covered with ice and there is no technology to clean spilled oil and chemicals out of ice.” Geologists say the eastern Barents, under Russian economic stewardship, probably contains far more oil and gas than the Norwegian sector, though the Norwegians have beaten their neighbors to the punch by starting production in a western Barents field called Snow White. Based on expertise gained there, a Norwegian company, Statoil, has signed up to help Russia’s state gas giant, Gazprom, develop a large offshore field called Shtokman far out at sea on the Russian side of the Barents. That technologically demanding project has been delayed, however, by low gas prices.




At a meeting in Canada of the Arctic nations last month, Foreign Minister Jonas Gahr Store of Norway seemed to express frustration over Russia’s longstanding opposition to placing the maritime boundary at an equal distance between islands of the two nations. He was widely quoted as saying Russia was “not yet a stable, predictable state.” The two states have clashed in the past over fishing rights and practices in the Barents Sea, which contains vast stocks of cod. But in recent years Russia and Norway have worked closely on a shared fisheries management system. So while the new dividing line will add clarity it will not alter fishing practices on a large scale, Mr. Ostreng said. The area in question qualifies as the high seas, he said, so no matter where the line was drawn it would not affect passage by naval vessels or commercial ships.


Source: http://www.nytimes.com/2010/04/28/wo.../28norway.html