Europe

Russia is building a strategic new pipeline to Europe that will affect European energy security for years to come. Called the North European Gas Pipe­line (NEGP), it will cross the Baltic Sea, directly con­necting Russia to Germany, and will bypass the Soviet-era, land-based energy transit infrastructure that traverses several former Soviet Bloc countries, including Ukraine, Belarus, and Poland.

Already under construction, the NEGP has attracted both investors seeking large returns and critics protesting Russia’s increasingly powerful energy-transit monopoly. With Europe’s steadily increasing appetite for natural gas, this new direct link will strengthen Russia’s hold over the European gas market and lessen dependence on transit coun­tries, including Ukraine, Belarus, and Poland. Although the pipeline will prove beneficial in guaran­teeing more secure Western European access to Rus­sian natural gas, it also has the potential to increase the dependence of the European Union (EU) on Rus­sia, thereby making Russia even more powerful and, possibly, more assertive in the international arena. This could have insidious consequences in a time of increasing divergence between Russia’s foreign and domestic policies and Western interests and norms.

In order to avoid EU overdependence on Russian natural gas, the U.S. and EU governments should work in concert to:

• Encourage alternative pipeline proposals, such as Nabucco, which would link energy sources in the Caspian region to southern Europe via Turkey;
• Develop alternatives to pipelines for the transit of natural gas, especially shipments of liquefied natural gas (LNG);
• Act in concert with other G-8 members to per­suade Russia to ratify the Energy Charter; and
• Provide financial and political support for intensified research and development of alter­native market-based energy sources.

Europe’s Strategic Energy Dependence

Natural gas is the second-largest source of energy in Western Europe. Most of it is extracted from British, Dutch, Italian, Romanian, German, and Danish fields, with ad­ditional gas imported from Russia, Norway, and Nigeria.[1] Russian gas imports account for 26 percent of EU con­sumption, representing 40 percent of the im­ported gas consumed by households and businesses.[2] In Central and Eastern Europe, Russian gas accounts for 87 percent of total imports and 60 percent of consumption.[3]

Demand for natural gas is expected to rise significantly over the next 15–20 years, coinci­dentally with a steady depletion of reserves in EU countries.[4] Strict EU environmental regula­tions will force EU member states to replace high-emission fossil fuels, such as coal, with cleaner burn­ing energy sources, such as natural gas and nuclear power. Social resistance to nuclear power, especially in Germany, may prevent it from becoming a major energy source there.

Liquefied natural gas would not be constrained by the limited capacity of the natural gas pipelines, but the process of liquefying gas is still expensive, and most natural gas exporters and importers have yet to develop the infrastructure necessary to make LNG shipments cost-effective. In the near term, therefore, EU consumption of piped natural gas is likely to rise, and the EU will look increasingly further afield to Norway, Algeria, and Russia to meet its natural gas needs.[5] In the near to medium term, the importance of Russia’s role appears likely to grow.

Increasing imports from any of these countries would be a costly endeavor requiring massive investments to develop the necessary extraction, production, and transportation infrastructure. Pip­ing gas from Algeria would require undersea pipe­lines, which are far more costly than overland pipelines.[6] Norway’s reserves are limited. The EU is looking to tap other sources of natural gas, such as the Caspian Basin and Central Asia, but these regions, like the Middle East, are characterized by high levels of political instability and are thus less reliable as suppliers. As for LNG imports, they are economically viable only over large distances.

On the other hand, transit infrastructure for natural gas deliveries from Russia to Europe already exists. Russia currently supplies roughly 40 percent of Europe’s imported gas, with higher percentages of Russian gas consumed in Eastern Europe than in Western Europe. (See Table 1.) Projections indicate that this percentage will increase to roughly 60 percent by 2030.[7] Given dwindling reserves and political and logistical restrictions on other potential natural gas suppli­ers, Russia is in an excellent position to capture the lion’s share of the European gas market.

EU officials have voiced increasing concerns over Russia’s reliability as an energy exporter, par­ticularly since the January 2006 Russian–Ukrainian gas dispute, when Russia cut off gas shipments to Ukraine and Ukraine responded by siphoning off gas from Russia that was destined for EU countries. Ukraine, in turn, claimed that Russia owed that gas to Ukraine under the existing contracts. The affair resulted in a temporary mid-winter interruption in the EU gas supply.

As Ukraine is the transit country for most Rus­sian gas exports to Europe, it is essential for EU energy security that Ukraine and Russia maintain stable business relations. Fully 80 percent of Rus­sia’s natural gas exports reaches the EU via Ukraine,[8] with another 20 percent through Belarus.[9] Both of these countries have long, com­plicated political histories with Russia, while Gaz­prom has supplied subsidized gas since the collapse of the Soviet Union. Last year, for exam­ple, Belarus received gas at 20 percent of the aver­age European price.[10] In February 2004, however, Gazprom briefly cut supplies to Belarus, which balked at signing new contracts.[11]

Even before the January 2006 crisis with Ukraine, Russia had long wanted to diminish the influence of transit states in gas shipment to Europe, thereby denying both Ukraine and Belarus considerable transit-fee revenue and eventually assuming owner­ship over gas transit infrastructure. In December 2005, concerned about a repetition of Ukraine’s “Orange Revolution” in Belarus, Russian President Vladimir Putin promised Belarusian ruler Alexander Lukashenko access to cheap gas.[12] This was extremely costly for Russia, both financially and politically, because of Belarus’s uncompetitive econ­omy and Lukashenko’s international pariah status.

Overall, tenuous relationships between Russia and the transit countries have created fear of polit­ical complications between supplier and transit countries, causing another gas shutoff to Western Europe and thereby generating both consumer and supplier support for a new pipeline that will bypass Central and Eastern Europe and link Western Europe directly to Russia.

The North European Gas Pipeline

Since 2003, Russia has begun to cut out the mid­dleman. In February 2003, Russia and Germany pro­posed the idea of a North Baltic pipeline extending over 2,000 miles (700 of them underwater) from Russia to Germany via the Baltic Sea. In January 2004, the Russian government issued an official decree in support of the pipeline’s construction, and several European oil and natural gas concerns have shown interest in the majority-Gazprom project. Construction began on December 9, 2005.[13]

The North European Gas Pipeline (NEGP or Nord Stream) will extend roughly 300 miles over land to Vyborg, Russia, on the Gulf of Finland and from Vyborg under the Baltic Sea to Greifswald in northeast Germany. Based on Russian President Putin’s predictions, the pipeline, with an initial annual capacity of 27.5 billion cubic meters of gas, will become operational in 2010. The NEGP’s capacity is to reach approximately 52 billion cubic centimeters upon completion of a second pipeline in 2013.[14] Gazprom has estimated the cost of con­struction at $4.7 billion.[15]

Nord Stream will supplement existing land-based pipelines, allowing for greater pipeline capacity for Russian gas exports to Europe. This is particularly significant in light of Gazprom’s development of the Shtokman gas field in the Barents Sea, with reserves estimated at 3.7 trillion cubic meters of natural gas, beginning in 2010. Gazprom’s stated intention is to use Nord Stream to transport gas from the Shtokman field to Europe.[16]

The North European Gas Pipeline Company (North Trans Gas) has been registered in Zug, Swit­zerland, to build the pipeline’s submarine section. Former German Chancellor Gerhard Schroeder, who signed the initial agreement with President Putin for construction of NEGP, is now chairman of the NEGP consortium—a fact that caused an out­cry in his home country.[17]

This is not an equal partnership. Gazprom owns 51 percent of North Trans Gas shares, and the Ger­man partners BASF and E.ON each own an addi­tional 24.5 percent.[18] Gazprom has announced that a third partner could obtain a 9 percent stake in the project with favored parties, including Gaz de France and Dutch Gasunie.[19]

The main source of supply for the pipeline will be the Yuzhnorusskoye gas field in the Yamal– Nenets Autonomous District. While this field can­not supply the entire pipeline, Gazprom represen­tatives say that by the time the second stretch of the pipeline has been completed, it will be possi­ble to start bringing in gas supplies from the Yamal, Obsko–Tazovskaya Bay, and Shtokman gas fields.[20]

As the first direct link between the Russian gas transport network and the West European gas net­work, the NEGP will mark a new stage of coopera­tion between Gazprom and the EU energy market.

Pipeline of Concern

As the Baltic pipeline complements the ones through Ukraine and Belarus, the EU will be less concerned about whether the relationship between Russia and its former allies might disrupt Europe’s main source of gas, and this diminished concern may give Russia freer rein in its own back yard. Meanwhile, the increased trade between Russia and Germany may promote increased dependence on Russia, making it easier for Russia to engage in two-tiered pricing schemes, offering gas at a discount to smaller Eastern European countries in exchange for political cooperation.

Natural gas prices vary depending on region and type of gas. In Europe, the price of gas for each individual country or region is the wholesale price minus delivery costs. Since delivery costs for ship­ments to Ukraine are low relative to costs for ship­ments to countries like France that are farther away and have no existing pipeline infrastructure, Ukrai­nians should pay less for Russian gas than do the French. In view of the European pricing formula, the “market price” that Ukrainians pay for Russian gas—roughly $95 per thousand cubic meters—is still low. Larger EU states such as France and Ger­many may therefore be reluctant to speak out against geopolitical concerns about the Nord Stream because they depend on Russia for a large percentage of their gas supplies.

Nord Stream has other drawbacks as well, including a potentially negative ecological impact on the fragile Baltic Sea basin. The Baltic Sea is a unique and sensitive ecosystem, which the Interna­tional Maritime Organization has given the status of PSSA (particularly sensitive sea area).[21] During and after World War II, the Baltic seabed was lit­tered with thousands of tons of ship wreckage and chemical weapons shells containing various types of blister agents and nerve gas, the exact where­abouts of which are still unknown.[22] Pipeline con­struction could damage these corroded chemical weapons containers, with potentially severe envi­ronmental consequences.[23]

The cost of the Baltic pipeline is significantly higher than that of constructing alternative land-based pipelines, such as Yamal–Europe II from Russia to Germany via Poland and Belarus.[24] Even if the Baltic pipeline comes on line in 2010 as scheduled, its initial throughput capacity will be a mere 27.5 billion cubic meters a year, whereas transit capacity for pipelines that run through Ukraine is 132 billion cubic meters a year.[25] While the Baltic pipeline will not have the capac­ity to fully replace existing infrastructure, the motives for its construction are clearly political as well as economic.

Advocacy for Nord Stream

Russia has launched a strong advocacy of Nord Stream. Gazprom chairman Alexei Miller has described the NEGP as “a new export route that will increase Europe’s energy security,” and Prime Minister Mikhail Fradkov has said that “in launch­ing this project we are creating the conditions for energy security in the world.”[26]

Nord Stream will alleviate uncertainty in the European market over the reliability of Russian gas supplies, allowing Russia to export its gas directly, and in greater volumes, to Europe. It will not only eliminate transit fees payable to Ukraine and other East European countries, but also reduce Gaz­prom’s dependence on those countries for export­ing gas, to the economic benefit of both importer and exporter. Moreover, as Russia invests billions in this pipeline, the Kremlin will have strong incen­tives to keep it full—and profitable.

Eliminating the middleman from trade in energy will have other economic and political benefits as well. Since the collapse of the USSR, Russia has continued to sell gas to both Ukraine and Belarus at a steep discount, trading rock-bottom gas prices for their political loyalty. These deals have proved problematic both economically and politically.

In the 2005 Ukrainian presidential elections, Rus­sia backed then-Prime Minister (and current Prime Minister) Viktor Yanukovych, whose falsification of electoral victory precipitated the “Orange Revolu­tion.” Turmoil resulted in prolonged political paraly­sis in Ukraine, as well as deterioration of Russian– Ukrainian relations. To complicate the situation fur­ther, unabashed support for Yanukovych was a source of embarrassment for Russia in the interna­tional community, which by and large decried Yanukovych and his electoral tactics as fraudulent.

Even more damaging to Russia’s international standing has been the Kremlin’s political and eco­nomic support for the Belarusian regime of Alexander Lukashenko, dubbed by Condoleezza Rice “the last true dictator in Europe.”[27] President Lukashenko has long relied on subsidies from Russia in the form of cheap gas, which he then resells to Western Europe at market prices, to maintain both Soviet-era social pro­grams and a base of popular support.

Russia was one of a handful of states, including Iran and Cuba, to recognize Lukashenko’s blatantly undemocratic re-election in the 2006 presidential race as legitimate. This prompted questions regard­ing Russia’s role in the international community, specifically its G-8 presidency. By diminishing eco­nomic and political ties to Lukashenko, Russia could better safeguard its export capacity, cut export costs, and avoid the embarrassment of being taken to task for enabling the continued existence of a Soviet-style dictatorship in Europe. This could prove beneficial to the people of Belarus as well. An end to Russian backing of Lukashenko might well result in the emergence of a genuine opposition-led government that could bring about real reform.

Nord Stream and Western Europe

Germany, Russia, and their project partners believe that Nord Stream will enhance overall EU energy security, which is particularly advanta­geous to Germany because it would make Ger­many the primary distributor of Russian gas in Europe. The pipeline will transport gas from Germany not only to the rest of Western Europe, but also to former transit countries: the Baltics, Poland, and other states of Eastern Europe.[28] But the pipeline could also detract from long-term EU goals, including reducing reliance on hydrocar­bons and enhancing financial stability in the newer EU member states.

Transit fees from gas crossing through Eastern European countries will no longer be factored into the price that EU countries pay for gas, thereby making it cheaper. However, the countries of Cen­tral Europe, including Poland, the Czech Republic, Slovakia, and Hungary,[29] will lose some transit rev­enues that supplement their national incomes and strengthen their economies.[30] For example, in 2005, Ukraine’s annual gas transit volumes were calculated at roughly 115 billion cubic meters of gas, for which it received $1.09 per thousand cubic meters in addition to the 25 billion cubic meters it received as payment.[31]

Central Europe’s Vocal Resistance. Polish President Lech Kaczynski has argued that there is no economic justification for the NEGP.[32] Some in Poland have even compared the proposed pipe­line to the notorious Molotov–Ribbentrop pact between Hitler’s Germany and Stalin’s Soviet Union.[33] However, while the pipeline may be the result of German–Russian cooperation, which makes Poland understandably nervous, it is hardly an act of war comparable to the one that triggered World War II.

Lithuanian Prime Minister Algirdas Brazauskas[34] and a number of Estonian and Latvian politicians have also spoken out against the NEGP. One Latvian spokesperson estimated that constructing another pipeline through the Baltic countries to Germany would have cost 2.2 billion Euros, whereas the undersea Baltic pipeline will be approximately three times as expensive.[35] Former Estonian Prime Minister Juhan Parts has even attempted to invoke a 1982 U.N. convention on sea rights and advocates extending the tiny nation’s ter­ritorial waters to prevent the pipeline’s progress.[36]

German Chancellor Angela Merkel has sought to defuse tensions by promising to create a working group to examine the project that would include Poland. Whatever the outcome of such a working group, however, an enhanced role for Germany and a reduced role for the Baltic countries in gas transit between Russia and the EU, while not desirable, now looks inevitable.

European Addiction or Global Energy Market Integration?

There are advantages for the EU in an increased supply of Russian gas, but there are also potentially negative consequences, such as greater Russian monopolization of Europe’s gas market and lack of energy market diversification. Global energy mar­kets will not benefit from European over-reliance on Russian natural gas. Diversification of supply is essential for market stability, competitive practices and pricing, and breaking up the monopolistic hold that Russia currently has over oil and gas transportation infrastructure between Russia, Europe, and Central Asia.

Furthermore, Moscow has shown itself to be increasingly authoritarian in its domestic politics and increasingly assertive in its foreign policy, openly declaring that Russia will use its energy resources as a foreign policy tool. President Putin has recently made a number of statements calling for the creation of a “gas OPEC,” which would include Iran and Turkmenistan. Such a gas cartel would control the world’s first, second, and fourth largest gas reserves, which together house 73 per­cent of total natural gas reserves,[37] and would have significant influence over the price of natural gas.

Any doubts about Russian monopolistic behav­ior are put to rest by Gazprom’s recent behavior. In February 2006, reports suggested that Gazprom would try to acquire a stake in British gas firm Cen­trica, prompting the British to look for ways to block such a deal.[38] The Kremlin and Gazprom responded to this with threats to reroute oil and gas exports to Asia if the EU were to block Russian acquisition of British gas concerns.[39] As Russian foreign policy continues to diverge from Western norms and values,[40] it is important that EU depen­dence on Russia not obstruct the Europeans’ ability to conduct independent foreign policy while openly criticizing Russian policies.

At the same time, however, Russia needs the EU as an importer as much as the EU needs Russia as an exporter, especially given that not one of Russia’s proposed pipelines to Asia has yet been con­structed. It is therefore possible that this interde­pendence might be used to enhance the EU’s ability to secure greater Russian compliance with the rules and norms of the global energy market.

To date, Russia has proved resistant to ratifying the Energy Charter, which it signed in 1994. The treaty addresses investment in and transit of energy and, if ratified, would require Russia to allow other Energy Charter signatories direct access to its excess pipeline capacity. This would effectively break up Russia’s monopoly on gas pipelines to Europe and might force Russia to price its own gas more competitively in relation to other suppliers.

Recent talks between Russia and the EU pro­duced a communiqué supporting the principles of the treaty; however, Finance Minister Alexei Kudrin has stated that “some of the principles it contains do not suit us.”[41] Despite Russia’s intrac­tability, if EU leaders, with possible U.S. support, were willing to apply firm, consistent pressure on Russia, or even to threaten the Kremlin with dete­rioration of energy-trade relations, Russia might eventually be convinced to ratify the treaty.

To avoid such pressures from the EU and to increase its leverage in world energy markets, Rus­sia has made overtures to Asian as well as European consumers—specifically, to China. However, high pipeline construction costs, uncertain Siberian reserves, the inefficiency of Russia’s monopolistic, state-run natural gas sector, and recent indications that Russian gas production is showing progres­sively slower growth suggest that Russia may not be able to fulfill its supply commitments to both China and the EU. Furthermore, Russia relies on cheap Central Asian gas to provide for its home market while exporting its own gas abroad.

With increasing global competition for Central Asian gas, a number of other export routes from Central Asia have been proposed, including pipe­lines from Kazakhstan, Uzbekistan, and possibly Turkmenistan to China, Pakistan, and even India. Both the U.S. and the EU have spoken in favor of construction of the Nabucco gas pipeline, which will originate in Turkey and feed gas through Bul­garia, Romania, Hungary, and Austria as an alterna­tive to Russian-controlled pipelines. Also under consideration is a pipeline from Kazakhstan, Turk­menistan, or Azerbaijan that would link up with Nabucco, providing the first direct connection between Caspian and Central Asian gas producers and European markets. As export options increase, Central Asian states may prove unwilling to con­tinue selling their gas at a deep discount to Russia if they can get higher prices elsewhere.

No less important is the longer-term consider­ation of the need to reduce overall dependence on fossil fuels. In energy-inefficient Eastern and Cen­tral Europe, drastically increased prices and reduced transit revenues could have unexpected positive results in promoting a combination of energy conservation and more energy-efficient industries. Some Central European countries might expand electricity production from nuclear reac­tors. In Western Europe, however, a false sense of security brought on by a more stable supply of fos­sil fuels might deflect attention away from the urgent need to find new energy-saving technologies and new sources of energy. Although the Baltic pipeline will ease many short-term concerns for both Russia and the EU, in the long term, it could prove to be more of a hindrance than a help.

Policy Implications

For the United States, greater Russian influence over Europe’s oil and gas transportation infrastruc­ture is a negative geopolitical development. Russia has shown increasing resistance to security coopera­tion with the U.S. on vital issues involving Iran and North Korea, is resistant to the promotion of democ­racy in its vicinity, and has demonstrated a growing willingness to use its energy resources to influence other, smaller countries for political purposes.

Furthermore, the U.S. has a strategic interest in minimizing European overdependence on Russian energy, which would limit the EU’s ability to side against Russia on questions of great importance, such as Iranian nuclear proliferation. To avoid a sit­uation in which Europe is increasingly dependent on Russia, the U.S. Departments of State and Energy should therefore:

• Publicly endorse the construction of a gas pipeline from Azerbaijan, Kazakhstan, or Turkmenistan to Southern Europe through Turkey. Such a pipeline, connected to the pro­posed Nabucco pipeline through Bulgaria, Romania, Hungary, and Austria, would bypass Russia and offer an alternative to Russian gas in Europe, helping to break up the Russian near-monopoly on energy transportation infrastruc­ture to Europe. It would also allow Central Asian states, such as Azerbaijan, Kazakhstan, and (in the future) Turkmenistan, to play a more active role in marketing and selling their natural gas without Russian interference and detract from Russia’s ability to exercise political influence in those countries.
• Encourage EU leaders to look to increased LNG consumption as an alternative to perma­nent pipelines. Significantly cheaper than pipeline construction, LNG shipments are not restricted by limited field and pipeline infra­structure and should allow Western Europe to import its natural gas from a wider range of sources, including Norway and Nigeria. Short-term investments in LNG infrastructure will likely yield significant source diversification and long-term political and economic returns.
• Act in concert with EU countries and Japan to encourage Russia to ratify the Energy Char­ter, which would enhance Moscow’s predict­ability and transparency in energy markets. Despite having signed the Energy Charter, which would require it to allow other energy producers access to its extra pipeline capacity, the Russian Duma has refused to ratify the treaty. Given close energy trade ties and the prospect of increased trade volumes between Russia and the EU, EU leaders should pressure Russia to ratify the charter, as they did in the recent summit with Putin in Finland. Being a signatory of the Energy Charter would discour­age Russia from further two-tiered pricing schemes, strategic cutoffs of energy supplies for political reasons, and monopolistic practices. Russia should be persuaded to allow Western firms equal access to its energy reserves.
• Support research and development of mar­ket-based alternative energy sources as the only long-term solution to reducing Western reliance on non-transparent, potentially unsta­ble states for vital hydrocarbon supplies. The U.S. and EU countries should follow the exam­ple of countries like Brazil, which have been successful in reducing dependence on foreign oil by making ethanol (from sugar cane) eco­nomically viable as a source of transportation fuel. This will require not only changes in man­ufacturing regulations and infrastructure, but also reducing or eliminating agricultural tariffs and subsidies that keep the price of sugar cane and corn artificially high.[42]

Conclusion

Western economies cannot immediately achieve greater energy efficiency on a level that will signifi­cantly decrease demand for hydrocarbons. Attaining greater security in access to hydrocarbon deliveries is therefore of the utmost importance in the near-to-medium term. However, it will be a net loss to EU countries if they allow this approach to lull them into a false sense of energy security and bind them­selves too closely to an energy supplier whose actions suggest that its oil and gas are national resources to be used for its own national interests.

The economic benefits that will accrue to Russia and Western Europe from the North European Gas Pipeline will be substantial in the next 10–15 years. They will be partly offset, however, by the loss of revenues to former transit countries and the result­ing increase in Russia’s ability to use its oil and gas assets to project influence into its former sphere of influence. It is a medium-term solution and, if not supplemented by longer-term energy solutions, could eventually impose great political and eco­nomic costs.

It is vital that the EU and the U.S. work together to find and implement innovative methods of reducing energy dependence on a monopolistic Russia. At a minimum, they should work to sup­port new transit lines that bypass Russia and to limit the length of time that the EU spends being over-reliant on Russian gas.

Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security in the Douglas and Sarah Allison Cen­ter for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. Conway Irwin assisted in the preparation of this paper.

[1] Mark Smedley, “What Diverse New Gas Flows Might Get Into Europe,” World Gas Intelligence, January 11, 2006, on Lexis-Nexis.

[2] Jonathan P. Stern, The Future of Russian Gas and Gazprom (Oxford, U.K.: Oxford University Press, 2005), p. 143, Table 3.6, “European Dependence on Russian Gas Supplies, 2003.”

[3] Ibid.

[4] W. Czernie, “Structural Change in the European Gas Industry: Risks and Opportunities,” Worldenergy.org, at www.worldenergy.org/wec-geis/publications/default/tech_papers/17th_congress/1_4_14.asp  (June 2, 2006).

[5] “Analysis: Energy Dependence and Supply in Central and Eastern Europe,” EurActiv.com, May 15, 2006, at www.euractiv.com/en/energy/analysis-energy-
dependence-supply-central-eastern-europe/article-155274  (June 2, 2006).

[6] Ibid.

[7] Jeremy Page and Anthony Browne, “Summit Set for Angry Clash over Energy,” The Times (London), May 25, 2006, at www.timesonline.co.uk/article/0,,5-2196245,00.html  (August 1, 2006).

[8] Theodore George Tsakiris, “The Eurasia Energy Complex,” Defense & Foreign Affairs Strategic Policy, February 2006, on Lexis-Nexis.

[9] German Economic Team in Belarus, “Belarus as a Gas Transit Country,” Research Center for the Institute of Privatization and Management, March 2004, atwww.ipm.by/pdf/pp304e.pdf  (August 1, 2006).

[10] Alexander Kolesnikov, “Belarus Doesn’t Shop Around for Gas,” Kommersant, December 16, 2005, at www.kommersant.com/page.asp?idr=527&id=636019 .

[11] Stern, The Future of Russian Gas and Gazprom, p. 10.

[12] Mark Franchetti, “Putin Blesses Europe’s Last Dictator,” The Sunday Times (London), January 8, 2006, at www.timesonline.co.uk/article/0,,2089-1974862,00.html .

[13] Tsakiris, “The Eurasia Energy Complex.”

[14] Owen Matthews and Anna Nemtsova, “Roiling the Baltic Waters,” MSNBC.com, January 23, 2006, atwww.msnbc.com/id/10854978/site/newsweek/print/1/displaymode/1098/  (February 21, 2006).

[15] “German, Russian Officials Launch Work on Controversial Baltic Pipeline,” Agence France-Presse, December 9, 2005.

[16] Judy Clark and Nina Rach, “Gazprom to Develop Shtokman Alone, Pipe Gas to Europe,”Oil & Gas Journal, October 10, 2006, at www.energybulletin.net/21287.html  (October 16, 2006).

[17] “Germany: Schroeder’s New Gig Causes Trouble at Home,” Stratfor, March 30, 2006, athttp://images.google.com/imgres?imgurl=http://web.stratfor.com/images/europe/art/3_30_negp_747.
jpg& imgrefurl=http://www.stratfor.com/products/premium/read_article.php%3Fid%3D264178&
h=370&w=400&sz=42&hl=en&start=24&tbnid=aYLOrLaC-yvphM:
&tbnh=115&tbnw=124&prev=/images%3Fq%3DNEGP%26start%3D20%26ndsp%
3D20%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DN (August 3, 2006).

[18] “German, Russian Officials Launch Work on Controversial Baltic Pipeline.”

[19] “Dutch Gasunie ‘Surprised’ to Learn It Is Leading Contenders on Baltic Pipeline Deal Talks w/Gazprom,” Interfax, February 14, 2006, on Lexis-Nexis.

[20] Nina Kulikova, “Trans-Baltic Pipeline Moves Ahead,” Russia Profile.org, November 28, 2005, at www.russiaprofile.org/business/2005/11/28/804.wbp (June 1, 2006).

[21] “The Baltic Sea Designated as a Particularly Sensitive Sea Area,”Keskkonnaministeerium, 2005, at www.envir.ee/66811  (July 2, 2006).

[22] Matthews and Nemtsova, “Roiling the Baltic Waters.”

[23] “Baltic Pipeline Poses Environmental Threat—Estonian Premier,” RIA Novosti, March 11, 2005, at http://en.rian.ru/world/20051103/41987041-print.html (June 1, 2006).

[24] Keith C. Smith, “Current Implications of Russian Energy Policies,” The Action Ukraine Report, January 19, 2006, at http://action-ukraine-report.blogspot.com/2006/01/aur644russian-energy-policies.html (June 5, 2006); “Major Russian Oil and Natural Gas Pipeline Projects,” U.S. Energy Information AdministrationCountry Analysis Brief, January 2005, at www.eia.doe.gov/emeu/cabs/russia_pipelines.pdf(October 16, 2006).

[25] Tsakiris, “The Eurasia Energy Complex.”

[26] “German, Russian Officials Launch Work on Controversial Baltic Pipeline.”

[27] Nick Paton Walsh, “Europe’s ‘Last Dictator’ Defies Calls for Change,” The Guardian, May 6, 2006, at www.guardian.co.uk/russia/article/0,2763,1477717,00.html (June 6, 2006).

[28] Kulikova, “Trans-Baltic Pipeline Moves Ahead.”

[29] “North Central Europe,” U.S. Energy Information Administration Country Analysis Brief, June 2004, at www.eia.doe.gov/emeu/cabs/visegrad.html (August 3, 2006).

[30] Stephen Wagstyl, “The Pull of the West,” Yale Global Online, from The Financial Times, February 22, 2005, at http://yaleglobal.yale.edu/display.article?id=5313.

[31] Mark Davis, Ruslan Piontkivsky, Olga Pindyuk, and Dejan Ostojic, “Ukraine: The Impact of Higher Natural Gas and Oil Prices,” World Bank, December 6, 2005, athttp://siteresources.worldbank.org/INTUKRAINE/Resources/328335-1136408888892/
EnergyPricePolicyNote.pdf  (October 16, 2006).

[32] “We Are Very Vigilant When it Comes to the Polish–German Relationship: Spiegel’s Interview with Poland’s Kaczynski,” Der Spiegel, March 8, 2006, athttp://service.spiegel.de/cache/international/spiegel/0,1518,404675,00.html (June 5, 2006).

[33] Martin Helme, “Berlin–Moscow Gas Pact Easy to Thwart…If Balts Have Guts,” The Brussels Journal, December 21, 2005, at www.brusselsjournal.com/node/590  (July 14, 2006).

[34] “German, Russian Officials Launch Work on Controversial Baltic Pipeline.”

[35] “Baltic Pipeline Poses Environmental Threat—Estonian Premier.”

[36 ]Matthews and Nemtsova, “Roiling the Baltic Waters.”

[37] Sergey Blagov, “Russian Moves Spark ‘Gas OPEC’ Fears,” International Relations and Security Network Security Watch, June 10, 2006, at www.isn.ethz.ch/news/sw/details.cfm?id=16364  (October 16, 2006).

[38] Stefan Wagstyl, “Gazprom Attacks EU Gas Market Plans,” FT.com, April 25, 2006, atwww.ft.com/cms/s/335a18ec-d48a-11da-a357-0000779e2340.html  (October 16, 2006).

[39] Peggy Hollinger, “Gazprom Threat Adds to EU Fears on Supply,” The Financial Times, April 20, 2006, at https://registration.ft.com/registration/barrier?
referer=http://www.euractiv.com/en/energy/record-oil-prices-gazprom-eu-worried/
article-154523&location=http%3A//news.ft.com/cms/s/
1bfa611c-d09c-11da-b160-0000779e2340.html (June 6, 2006).

[40] Dmitri Trenin, “Russia Leaves the West,” Foreign Affairs, Vol. 84, No. 4 (July/August 2006), pp. 87–96.

[41] Stephen Boykewich, “A War of Words on Energy at G8 Talks,” The Moscow Times, June 13, 2006, at www.themoscowtimes.com/stories/2006/06/13/003.html.

[42] Ariel Cohen, Ph.D., “Increasing the Global Transportation Fuel Supply,” Heritage Foundation Executive Memorandum No. 986, October 25, 2005, atwww.heritage.org/Research/EnergyandEnvironment/em986.cfm   (August 2, 2006).

‍

U.S. Policy and the Georgian-Russian Crisis

10-10-2006

Amid great power fretting over North Korea’s nuclear test and continuing Iranian truculence against the West, Russia escalated its confrontation with the neighboring Georgia. Moscow is now using Georgia’s arrest of four alleged Russian intelligence officers two weeks ago as a pretext to escalate its conflicts with Tbilisi. This is a dangerous development for the West, and specifically the United States, which could see its influence in the Caucasus region crumble if Russia is successful in forcing Georgia into its sphere of influence. U.S. policy must walk a fine line of encouraging settlement of the current dispute without becoming a liability through over-involvement.

Georgia may have overplayed its hand in arresting the Russian military intelligence officers, whom it accused of sabotage, and not just expelling them quietly—the normal modus operandi in such cases. In response to the arrests, Moscow recalled its ambassador from Tbilisi, evacuated diplomats and their families, and halted issuing visas to Georgian citizens. The Russian military forces stationed in Georgia are on high alert. Russia cut air and railroad links to Georgia, and blocked money transfers from Georgians working in Russia, an important source of income for many Georgian families.

Bearing the brunt of this invigorated conflict is one-million-strong Georgian Diaspora in Russia. Ethnic Georgians, including children, were loaded onto cargo planes and expelled from Russia. Russia cites their illegal immigration status. Prominent Georgian intellectuals who are Russian citizens are being harassed by the tax police. Georgian businesses in Moscow are being singled out by law enforcement authorities. The handling of this crisis is further damaging Russia’s international standing as a dependable member of the G-8.

Georgian Overkill?

Since Mikheil Saakashvili rose to power in the Rose Revolution of 2003, Russia has warily witnessed anti-Russian statements by Georgian leaders, a relentless push to evacuate Russian military bases (to which Russia had agreed previously), an attempt to join NATO, and opposition to Russian membership in the World Trade Organization. In response, the Putin administration has embargoed Georgia’s key exports into Russia: Borjomi mineral water and wine.

Russia has made little secret of its desire to spark a war in the Caucasus to force regime change in Tbilisi. (See Ariel Cohen, “Preventing a Russian-Georgian Military Confrontation,” Heritage Foundation Webmemo No. 1024, March 31, 2006, at http://www.heritage.org/Research/RussiaandEurasia/

wm1024.cfm.) It may get its wish. In September, South Ossetian separatists, who receive Russian military support, fired on a Georgian helicopter carrying the Georgian Minister of Defense. This provocation, if successful, could have led to renewed hostilities in the small secessionist territory that is a part of Georgia.

Geopolitical Roots

Russia’s regional and global strategic aims explain why Moscow is escalating its conflict with Georgia. First, Russia has attempted before to block NATO enlargement into former Soviet territory. In 1999, Russia fulminated against the Baltic States’ NATO membership. But at that time, Russia was extricating itself from the 1998 economic crisis while a power struggle was afoot in Moscow to succeed President Boris Yeltsin. In part because energy prices were much lower in 1999, Western European countries supported the Baltic States’ NATO bid despite Russian protests. Today, with the West increasingly dependent on Russia’s Gazprom, they are taking Russia’s foreign policy positions much more seriously.

Second, the Kremlin is now buoyed by $250 billion in petro-dollar reserves. These funds can buy a lot of hardware for the Trans-Caucasus Military District and pro-Russian separatists in Abkhazia and South Ossetia.

Third, Russia is uneasy over the Baku-Tbilisi-Ceyhan main export pipeline (MEP), which takes Azeri oil to Mediterranean markets and crosses Georgia but bypasses Russia. Soon the Absheron-Erzurum gas pipeline will come online, bringing Azeri gas to Turkey and Europe, again bypassing Russia. Gazprom fears that this gas pipeline may eventually allow Turkmeni and Kazakhstani gas to circumvent its pipeline network on its way to Europe.

A Balance of Power Shift

If Georgia comes under the Russian sway, neighboring Azerbaijan and Armenia will feel the full weight of the Russian presence. Foreign policy experts in Moscow believe that the Russian government is angry that Azerbaijan has not allocated enough oil patches to Russian companies and has facilitated its oil exports via Turkey instead of Russia. With increased power in the region, Russia will act on these concerns.

Armenian opposition openly seeks a more pro-Western and less pro-Russian policy, pointing out that close ties with Moscow did not improve Armenia’s abysmal living standards and did not bring international recognition of the independence of Nagorno-Karabakh, a breakaway province of Azerbaijan, populated mostly by Armenians.

A pro-Russian Georgia in the Collective Security Treaty Organization of the Commonwealth of Independent States would permit Russia and Iran to dominate Azerbaijan and Armenia, severely limiting U.S. policy options there. Furthermore, such a development would put to rest American ambitions in Central Asia and could cut off strategically important Kazakhstan from western energy markets.

The Kosovo Ripple Effect

Russia has warned repeatedly that it will retaliate severely if Kosovo is granted independence against the will of Serbia, a historic ally, and Russian President Vladimir Putin has called for the imposition of the Kosovo criteria on separatist enclaves in the former Soviet Union, including Transnistria (a part of Moldova), Abkhazia, South Ossetia, and Nagorno-Karabakh. Under this policy, Russia would enforce referenda in these territories and recognize their independence, opening the door to their eventual incorporation in the Russian Federation. This approach would create a dangerous precedent for the Crimea, where the majority of the Russian-speaking population is pro-Russian; Russian-speaking Eastern Ukraine; and the predominantly Slavic Northern Kazakhstan.

Violations and alternations of the current borders of the former Soviet Union could generate severe tensions in Europe and open a Pandora’s box of territorial claims and ethnically based border challenges there and elsewhere, such as in Iraq and Kurdistan.

Conclusion

The United States today is preoccupied with Iraq, Afghanistan, Iran, and North Korea. Russia is a key player in all of these, and its increased cooperation in these disputes would be welcome. The future of U.S.-Russian relations and global security requires that Moscow behave responsibly and constructively. Quickly defusing the Georgian crisis through diplomacy would be a good place to start. Washington should encourage the European powers, the European Union, and Turkey to become more engaged in defusing the Georgian-Russian confrontation. Finally, the U.S. should advise Georgia not to escalate its rhetoric on Russia unnecessarily or needlessly antagonize its large neighbor. After all, a peaceful and prosperous Caucasus is in Russian, Georgian, and American interests.

‍

“The Party has been, and remains, the main organizing and coordinating force capable of leading the people along the path of profound Socialist renewal.…”

—Mikhail Gorbachev

With the fall of the USSR, the Russian post-Soviet elite was demoralized by the collapse of Soviet power and sought a new direction. For a time, ideol­ogy took a back seat to market reforms, competition, and repudiation of government control. However, “men of the state” and “men of force”—known in Russian as “derzhavniki” and “siloviki”—have reversed this trend.

The resurgence of nationalist rhetoric has acceler­ated markedly since the 2000 election of Russian President Vladimir Putin and the rise of oil prices. With Putin’s departure scheduled for 2008, his United Russia party will require more than fond memories of the popular president to maintain the support and trust of the people. It needs a coherent political doctrine. This effort has finally been accomplished.

In February 2006, Vladislav Surkov, Putin’s deputy chief of staff and chief political strategist, delivered an extensive speech at a United Russia political semi­nar.[1] For the first time, he outlined the underlying ideology, goals, and aspirations of the Russian Feder­ation’s largest political party. Surkov’s speech was sub­sequently published in two consecutive issues ofMoskovskie Novosti, a formerly liberal weekly, under the title “The General Line” in direct allusion to the term applied to Soviet Communist Party policy between the 1920s and 1980s. The speech was later widely reprinted elsewhere, and media leaks from the Kremlin indicate that such wide circula­tion amounts to publication of the new official Kremlin doctrine.[2]

Surkov’s speech defines the strategic direction that Putin wants Russia to pursue, the goals to which she should aspire, and how the party can lead the country to achieve those goals. Much of it was reflected in Putin’s State of the Federation speech to both houses of the Duma, Russia’s parlia­ment, on May 10. It combines democratic and mar­ket rhetoric with deliberate actions of power centralization and ideological and economic nationalism bordering on protectionism.

This ideological treatise is a great insight into the Kremlin’s thinking and policy. Recent steps under­taken by the Russian Federation and public state­ments by Russian officials indicate that Russia may be asserting its dominance abroad, especially in the former Soviet area. The speech provides a number of reasons for the United States to reevaluate its policies toward Russia and act on the basis of what is realistic and possible.

Importance of Surkov’s Speech

Surkov’s speech is intended both to outline a social contract between the Russian leadership and the Russian people and to ensure that United Rus­sia continues to enjoy its position as the dominant party in Russian politics. If this social contract is accepted, United Russia will have succeeded in cre­ating an ideological framework for national unity and a road map to national greatness; at the very least, it will have ensured its position as a ruling party until the presidential elections of 2012 or even beyond. This is a greater accomplishment than previous attempts to create a ruling party in post-Communist Russia, such as Russia’s Choice (1993) and Our Home Russia (1996).

The text of the speech and the timing of its deliv­ery reflect Russia’s social, political, and economic trajectory, including aspirations of single-party rule, energy superpower status, and geopolitical conflicts and alliances. All of this is contingent upon United Russia maintaining its status as the only political party in Russia with the means to implement its political agenda.

Democratic Rhetoric vs. Restrictive Reality

On the positive side, Surkov entreats Russians to become more active in politics, to familiarize them­selves with all sides of current debates, and to be part of the solution to Russia’s myriad pressing problems. His refusal to condone expropriation of private property is also hopeful. The development of a propertied class that is encouraged to partici­pate politically may be a decisive factor in the future growth and strengthening of democracy in Russia. The growth of such a class may increase calls for stronger protection of property rights and rule of law as well.

These would be welcome developments, as they not only help to improve the current situation in Russia, but also would enhance the security of for­eign investments in Russia. Unfortunately, how­ever, the current situation indicates that it is the bureaucracy, not the elected political leadership, that calls the shots in Putin’s and Surkov’s Russia.

Also promising are Surkov’s calls for picking up the pace of economic reform and integrating more fully into global markets. Increased openness to trade will likely foster improvements in economic efficiency, management, and transparency, all of which have suffered throughout the post-Commu­nist transition.

These democratic and free-market ideals will benefit Russian society if they are put into practice. However, calls for strengthening democracy coin­cide with legislation restricting representation and participation. Assets continue to be concentrated in the hands of a well-connected few. Simply put, in today’s Russia, democratic rhetoric is contradicted by increasingly centralized political practice.

Single Party Rule: A Democratic Deficit

United Russia was created in December 2001 by combining the pro-Putin Unity and former Prime Minister Yevgeny Primakov’s and Moscow mayor Yuri Luzhkov’s Fatherland–All Russia parties. It was a political construct of the Kremlin: the party of power, meant to occupy the center of Russia’s body politic.

United Russia is now the most powerful political party in the Russian Federation, with an estimated 100,000 members. Its showing in the March 12, 2006, regional and local elections, in which it won 197 out of 359 regional legislative seats, was a clear indicator of its strength.[3] Surkov suggests that, as with Germany’s Christian Democrats and Japan’s Liberal Democratic Party after World War II, United Russia should remain the dominant force in Russian politics for the next 10–15 years, and recent changes in the electoral system may ensure that this will come to pass.

At this point, no opposition group in Russia appears capable of posing any real threat to United Russia’s overwhelming share of popular support in the 2007 parliamentary or 2008 presidential elec­tions. However, the Kremlin is taking steps to rein in potential political challengers, first by abolishing the election of Duma members in “single mandate” electoral districts, opting instead for national party lists. Such a proportional electoral system seriously weakens the relationship between a voter and his elected representative. Deputy Director of the Cen­ter for Political Technologies Boris Makarenko has called this a “further stage in the consolidation of a monolithic system.”[4]

Rodina (Motherland), a leftist nationalist party that many suspect was created by Kremlin officials to siphon off support from the nationalist Liberal Democratic Party of Russia (LDPR) and the Com­munist Party, was barred from participation in the December 2005 Moscow City Duma elections for inciting racial hatred.[5]

The Duma is considering several amendments to electoral law. Ostensibly aimed at strengthening the party system by creating a small number of large parties, these laws, if passed, will rob the opposi­tion of their only means of competing with United Russia: through coalitions.[6] Another legislative proposal would authorize governors, who are Kremlin-appointed, to abrogate mayoral powers. Although so far ignored by the West, such extraor­dinarily broad powers will prove effective in con­solidating the Kremlin’s top-down authority.[7]

If all of the proposed electoral changes come to fruition, governors, mayors, and political parties will all be Kremlin-controlled, ensuring a predict­able outcome in the future parliamentary and pres­idential elections. The Kremlin is consolidating its own power at the expense of opposition forces and raising the possibility that United Russia will dom­inate politics in the Russian Federation for at least the next two electoral cycles (2007–2008 and 2011–2012).

At present, the majority of United Russia’s popu­lar support is derived from the popularity and cha­risma of President Putin, whose approval ratings fluctuate between 65 percent and 75 percent.[8] It is unlikely that the next president will share Mr. Putin’s appeal and popular support. United Russia must therefore replace the personal legitimacy of its leader with a more long-lasting ideological founda­tion to provide legitimacy for future leaders. Creat­ing a sense of unity, pride, and common purpose that is closely linked both to Putin and to United Russia may allow the party to stay in power even with a weak next president.

Strategic Resources

By maintaining control of the executive branch, the judiciary, security services, government-owned companies, and the parliament, United Russia offi­cials will be able to secure control over their share of the profits from nationalized resources[9] and, in many cases, expand the assets that they effectively control. At a recent conference in Moscow, Minister of Economic Development and Trade German Greff cited the acquisition of assets by large state-owned companies as a threat to Russia’s economic health. Minister of Finance Alexei Kudrin echoed this sen­timent, asserting that the state should play a smaller role in Russia’s economy.[10] Economists in Russia, Venezuela, and Bolivia agree that asset holding by the “state” or “people” in reality means beneficiary ownership by specific politicians and senior bureaucrats.

Government officials are reluctant to release their hold on strategic economic sectors because these same officials control and benefit from these assets. Gazprom, Russia’s behemoth state-owned gas firm, is chaired by First Deputy Prime Minister Dmitry Medvedev. Rosneft, the state-owned oil firm that forced a sale of Yugasnknefte­gaz, the production arm of YUKOS, below mar­ket price, is chaired by Igor Sechin, the Kremlin deputy chief of staff. Alexei Kudrin, despite his calls for less government control over the econ­omy, chairs the Russian state diamond monopoly, Alrosa.[11]

The melding of business and politics has created a pressing need by government officials to maintain the status quo at all costs. As is true elsewhere in the world, men whose wealth relies on government control of strategic economic sectors are unlikely to loosen their grasp on those resources, or on the political machinery that controls those resources, for the sake of reform.

Surkov stresses in his speech that the nationaliza­tion of strategic resources is in the interest of distrib­uting wealth among the Russian population. Russian GDP per capita has grown dramatically, from $1,170 in 2000 to $3,400 in 2004. However, income ine­quality in the Russian Federation remains remark­ably high. Energy superpower status certainly benefits Russia as a whole, but it benefits members of the political–bureaucratic–security elite with access to government-controlled resources far more than it benefits others.

Aside from its domestic implications, Russia’s energy superpower status is a means to protect sovereignty and exert influence abroad. Auton­omy is desirable for any state; however, Russia is using zero-sum game analysis and tactics in the global energy markets to promote its economic interests.

Alexei Miller, CEO of Gazprom and Deputy Energy Minster of the Russian Federation, recently threatened that “attempts to limit Gaz­prom’s activities in the European market and politicize questions of gas supply” might induce Russia to shift its export focus to Asia,[12]and these sentiments were echoed by President Putin him­self.[13] Russian leaders were particularly upset about resistance in Europe to selling gas-distribu­tion networks, such as Centrica in the United Kingdom.

Surkov asserts that in the global economy, Russia can either be a spider or a fly—an apt metaphor, as it reveals Russia’s attitude toward competition in global markets, which includes neither compro­mise nor cooperation.

“Enemies of the People”

Russia is to achieve full autonomy as a global geopolitical player by successfully manipulating energy markets. Energy superpower status under the guidance of United Russia is the key to Russia’s future, and anyone who would thwart Russia’s aspirations—oligarchs, opposition groups, terror­ists, foreign powers—is an “enemy.” Surkov seeks to rally popular support by identifying those who seek their own ends and oppose United Russia’s grand strategy as being among these common enemies.

“Oligarchic revanchists” provide a perfect scape­goat for the troubles of the post-Communist period, an ideal backdrop for the emergence of the great leader who creates order out of chaos, and a conve­nient rationale for nationalization of the most lucra­tive sectors of the Russian Federation’s economy. Surkov and others often allege that in the 1990s, oligarchs stole all of Russia’s assets and profited from them, denying ordinary Russians their rightful share of national resources. According to Surkov’s narrative, President Putin (despite being a senior Yeltsin official and designated successor) saved both Russia and its valuable resources from the oli­garchs. In this new age of order and democracy, these greedy individuals are no longer permitted to use Russia’s resources to their own advantage, but must use them instead for the Fatherland and the people.

Despite their alleged heinous crimes, however, oligarchs are deserving of membership in Russia’s elite—provided that their transgressions do not contradict Kremlin policy. Roman Abramovich, former partner of Boris Berezovsky in ownership of Sibneft, the Siberian oil company, is responsi­ble for the expatriation of billions of dollars. Putin however, recently reappointed him gover­nor of Chukotka, a province in the far Northeast of Russia.

“Isolationists,” or nationalist extremists, are a threat to the leadership of the Russian Federation because they are bad for both domestic stability and international perceptions of Russia. Isolating ultra-nationalists is necessary to maintain an image of respectability abroad and the ability to keep order at home, despite alarmingly frequent instances of hate crimes.

However, Russian law enforcement has been remarkably lenient in punishing the crimes of these “enemies of the Russian Federation.” For example:

• In early 2006, a Russian nationalist wielding a knife stabbed nine people in a Moscow syna­gogue. He was sentenced to 13 years in prison, but despite his claims that the attacks were inspired by anti-Semitic Web sites, the charge of inciting interethnic hatred was dropped, much to the surprise and consternation of human rights activists.[14]
• In 2004, a nine-year-old Tajik girl was murdered in a brutal attack by a group of Russian nation­alists whose ringleader was sentenced to five and a half years on a charge of “hooliganism.”[15]
• In 2006, an Armenian teenager was stabbed to death in Moscow by skinheads, apparently on racist grounds.[16] According to an Amnesty International report, in 2005, 31 people were murdered and 382 others were attacked in race-related incidents in Russia.[17]

In addition to racially motivated crime, Russian officials have exhibited an alarming degree of reli­gious intolerance. Young Russian Orthodox Chris­tians, who claimed that the exhibit had offended them, vandalized an exhibition of atheist art at the Sakharov museum. A Moscow court dismissed the case against them.[18] In January 2005, a group of Duma representatives called for the banning of all Jewish organizations in Russia, claiming that these groups incite ethnic hatred and “provoke anti-Semitism.”[19] There have been recent calls for offi­cial Russian Orthodox chaplains in the Russian military and the teaching of Russian Orthodoxy in state schools without any corresponding proposals with respect to other religions.

The Kremlin is doing very little to combat these “oligarchic revanchists” or “isolationist national­ists.” The reason is that these elements, in addi­tion to being useful as political scarecrows and scapegoats, provide justification for new laws to restrict the activities of non-governmental organi­zations (NGOs) that have little to do with political extremism.

As for enemies from outside the Russian Federa­tion, the Kremlin seems similarly ambivalent about the West, which is an invaluable trade partner but which also embodies democratic values and the rule of law. This foreign menace is all the more rea­son to support United Russia’s vision: a plan to ensure that Russia no longer has to bow to Western influence.

Why the West Should Be Concerned

Taken at face value, Surkov’s speech identifies Russia’s goals in both domestic and foreign policy and indicates whom Russia might consider ene­mies and friends. The doctrine also sheds light on a reality that many have been loath to admit: The period of the post-Communist honeymoon is over.

While the United States and the Russian Fed­eration can have common interests and reasons to cooperate, the U.S. must evaluate Russian poli­cies over the past five years. From the perspective of American national interests, these include (among others) developing ties with China and Iran, energy security, non-proliferation, democ­racy, human rights, and the rule of law. Russia is no longer weak and does not rely on Western funds and favor to maintain its place in the global order.

President Putin’s May 10, 2006, State of the Fed­eration address indicates that the Russian leader­ship intends to refashion the state as a capable counterweight to the United States, not only eco­nomically, but demographically and militarily as well. Putin called for women to return to their tra­ditional role of childbearing, and for government subsidies to mothers, in order to reverse the current population decline. He also emphasized the need for drastic improvements in all aspects of Russia’s military, from manpower to better ballistic missile defense, as protection against those that would undermine Russia’s sovereignty. In a not-so-veiled reference to U.S. foreign policy, he stated, “Com­rade wolf knows whom to eat—he eats and does not listen to anyone.”[20]

The goal of United Russia and its president is to make Russia once again an autonomous interna­tional player by returning to the values that made it strong in the past. If United Russia is successful, the U.S. and other Western powers must engage Russia on an entirely new level: as a competitor, not as a junior partner.

Will the Doctrine Work?

The predictive value of the doctrine outlined in Surkov’s speech is contingent on its fulfillment, which in turn relies on United Russia’s performance for the next 10 to 15 years. United Russia must attempt to hold on to hundreds of thousands of its current members once President Putin is no longer at the helm.

Surkov’s speech appeals to a broad range of the Russian population. Its nationalist undertones are tempered by denunciation of ultra-nationalists. Its excoriation of oligarchs is offset by its call for pro­tecting Russian businessmen and creating a new Russian business elite.

As in China, economic growth may provide an antidote against a decline in the party’s popularity. At the moment, Russia is flush with cash, benefit­ing from skyrocketing prices of oil and gas. But energy prices are volatile, and many oil and gas consumers are becoming convinced of the need to diversify supply sources, especially as Russia’s mis­handling of the Ukrainian and Georgian supply controversies contributed to Europe’s mistrust of Moscow. It is possible that a synthetic ideology will not suffice to keep United Russia in power once the Kremlin’s coffers are not so full.

Russia’s economy has seen healthy growth— about 7 percent a year for the past five years—and there is little expectation that oil and gas prices will decline any time soon. However, the high costs of exploration and of oil and gas in Russia’s inhospitable physical and investment climate, as well as stifling government control, make eco­nomic slowdown a real possibility. Although Surkov says quite clearly that reprivatization is not a desirable option, Russia has weak rule of law and a track record of arbitrary changes in and application of its tax codes. Lack of predictability and insufficient protection of investor rights is a strong deterrent to foreign investment, specifi­cally in non–natural resources sectors of the econ­omy. If these sectors do not grow, the Russian economy will be at the mercy of fluctuations in commodity prices.

Instead of privatizing Gazprom, however, Rus­sia has transferred to it a significant part of the oil sector and is using the giant company as an instru­ment of foreign policy. As the government’s appe­tite for spending grows, Russia will likely have to rely on its stabilization fund to finance the govern­ment budget.[21] The Kremlin may be faced with mounting economic difficulties sooner than expected.

How the United States Should Respond

In order to protect not only U.S. interests, but also the sovereignty and territorial integrity of the states of the former Soviet Union, the U.S. should adopt the following measures:

• Recognize that Russia is an autonomous actor no longer willing to play second fiddle to the United States. It is seeking to limit U.S. pres­ence and influence in the areas in which it has the ability to project military and political power. These areas include Central Asia, the Caucasus, Eastern Europe, and the Middle East. The U.S. should promote the principle of territorial integrity in Georgia and Moldova. Overall, it should encourage negotiations and non-military solutions.
• Continue to support diversification of energy transit routes in Eurasia, specifically from Kaza­khstan and/or Turkmenistan across the Cas­pian, to be linked with Europe through the Baku–Tbilisi–Ceyhan oil pipeline and the Baku–Erzerum gas pipeline via Turkey.
• Encourage Russia to sign the Energy Charter, an international treaty on energy production and transportation, which promotes foreign investment in the energy sector through trans­parency and accountability.
• Support free media, the rule of law, and demo­cratic political development in Russia through NGOs. These include both indigenous Russian NGOs and foreign NGOs working in Russia. The Department of State and the National Endowment for Democracy should identify, support, and expose to their peers abroad those young politicians, writers, and media personal­ities who disseminate the values of democracy, tolerance, and human rights and support polit­ical and economic liberty.

Conclusion

Vladislav Surkov’s ideological treatise is a great insight into the Kremlin’s thinking and policy. Recent steps undertaken by the Russian Federation and public statements by Russian officials indicate that Russia is trying to assert its dominance abroad, especially in the former Soviet area.

Surkov’s speech provides a number of reasons for the United States to reevaluate its policies toward Russia on the basis of what is realistic and possible. There may be relatively little that the U.S. can do to affect Russian domestic politics, but America can and should be prepared to support those who seek freedom.

Ariel Cohen, Ph.D., is a Senior Research Fellow in the Douglas and Sarah Allison Center for Foreign Pol­icy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. The author wishes to thank Con­way Irwin for contributing to this paper.

Appendix

The World According to Surkov

Russia’s Historic Legacy

At present, there is no consensus in Russia as to the assessment of events in its past, nor is there any consensus as to which direction it should take in the future. Russia is a European country, but there are differences between the Russian Federation and countries with deep traditions of Western demo­cratic values. “The fundamental values of democ­racy are ingrained in the citizens of the U.S.A., England, France. Wake them up in the middle of the night—they’ll start telling you about human rights and so forth.” These values should take on greater meaning in the daily lives of Russians, and Russians should develop their ability both to act according to these values in their interactions with one another and to triumph over opponents by means of an ideological offensive. “[T]he party, so that it may retain its dominant position in the polit­ical system (and that is our fundamental goal), must more actively master the skills of ideological warfare.”

Nikolay Berdyaev, an important early 20th cen­tury Russian philosopher, said, “It is necessary to strive for a free and fair society. Without freedom there can be no justice. Justice demands freedom for all people.” Berdyaev was a Russian thinker, and this was a Russian thought, unlike the works of Marx or Hegel. Russians should respect their ances­tors and should not pass undue judgment on the Soviet Union, as it is associated with “all our close kin, it is in fact we ourselves.”

There were two great achievements of the Soviet Union. The first was its powerful ideological mes­sage, which spread worldwide and included an understanding of freedom and justice. Soviet power—ideological, military, and even moral— was hugely influential on a global scale. It was even popular among Western intellectuals and contrib­uted to the liberation of colonies. It played a major role in world history, and that is something that Russians should remember.

The other astonishing achievement of the Soviet Union was industrialization. Russians today are profiting from this inheritance, which includes rail­roads, pipelines, factories, and nuclear weapons.

The Soviet Union had its negative side as well. Its repressive, closed Soviet society, “in which results are evaluated by party-dogma rather than pragma­tism, produced an ineffective elite…. Society was not only unjust, it also wasn’t free. It did not address the question of material needs” and “obviously fell behind the new quality of life of the Western coun­tries in satisfying the demands of the people.”

A Time of Crisis

The Soviet Union’s downfall was inevitable. “The Russian people themselves chose this fate—they rejected the socialist model” as inconsistent with their search for freedom and justice. However, the USSR tried to reform, to embrace the democratic values embodied in the Soviet constitution. The constitution of the USSR and its language about democracy made “the Soviet Union, uncondition­ally, the greatest modernization project. It already carried with it the seeds of democracy.” The col­lapse was the result of the Soviet people’s finally holding their country accountable for its promises of democracy, and “the loss of territory, the loss of population, the loss of a huge part of our economy” was the price that Russia paid.

After the downfall, because of disillusionment with the Soviet government, there was widespread belief that “government is evil…and having reduced it to nothing, everything would turn out fine. Of course, this vacuum [of power] was filled, and it was exactly these ambitious and self-serving commercial leaders who placed themselves in the myriad opportunities for power…. [E]ntire minis­tries, regions, parties found themselves under the control of independent financial groups, moreover under direct and literal control.”

The framers of the Soviet constitution did not foresee leadership by commercial interests. The constitution was not written for the purpose of sub­jugating elected officials to people with money. Democracy in the oligarchic period of the 1990s was not rule by many, nor was it rule by a substan­tial number. “You could count these people on your fingers…. [A]s a result, all the foundations of democracy were distorted.… If that was a democ­racy, then I don’t know what democracy is.”

Freedom of speech during this period took on its own special meaning. “[L]eading television net­works became weapons in the hands of famous oli­garchic groups” who used them to gain access to and divide among themselves even more govern­ment assets. Although privatization in and of itself is a good thing, it was carried out by means of awk­ward and confusing schemes, such as rigged oil-for-food auctions.

“In the federal system chaos ruled.” Centrifugal forces threatened Russia’s territorial integrity in the 1990s, especially rebellion in Chechnya and the inability of disparate regions to agree on a federal budget. In the midst of these centrifugal forces, Russia “was on the verge of losing its sovereignty.”

Russia’s Democratic Development

“If we want our society to be democratic, to pos­sess sovereignty and be an actor in world politics, we must develop our democracy, and here fundamental human rights are part of the strengthening the struc­ture of civil society. I see the [United Russia] party first of all as an instrument of civil society, as an instrument of societal participation in political life and in power…a self-regulating and non-commercial organization of a completely different kind…an insti­tute of civil society, a self-organization of citizens.”

Regarding changes in the political system in Rus­sia, such as the move to proportional representa­tion in the parliament, a proportional system is more democratic, as it will require a greater num­ber of votes for United Russia to have a majority in parliament: “more votes than all other electoral lists combined.” This is a means to strengthening the opposition and the party system in general.

As for presidential appointment of governors, and the oft-repeated question of how this helps to win the war on terrorism, it helps to avoid the chaos of the 1990s, in which there were too many parties, leading to the atomization of society. The goal of these changes is to “benefit society, strengthen its foundations.”

Among the political reforms of the past few years is the creation of the Public Chamber: “a new organ for the realization and development of opportunities for cooperation between government structures and societal organizations.” In effect, the Public Chamber is intended as an intermediary between the Kremlin and non-governmental organizations.

But democracy has one great enemy: corruption. It also has a downside: poverty. The government of the Russian Federation has yet to prove its effec­tiveness in providing a social safety net and seeing that wages are paid; for the “stable development of free society, free economics demands fairer distri­bution of GDP.”

The Path to Greatness: Obstacles and Opportunities

The fundamental threats to Russian sovereignty are international terrorism, military conflict, lack of economic competitiveness, and “soft” takeovers by “orange technologies [U.S.- and Western-sup­ported opposition movements] in a time of decreased national immunity to foreign influence.”

Although military conflicts are not a current threat, anything can happen, and the army, navy, and nuclear weapons are the “foundations of [Rus­sia’s] national sovereignty.” Russia’s economic growth, though impressive, started from a very low level. Structural reform has dragged out for far too long, and this will eventually take its toll on growth. Other problems include enormous govern­ment expenditures, budgetary problems, and lack of development.

The liberal idea that with full liberalization, all of these problems will right themselves is erroneous. Russian society must “work out a realistic model of further development. President Putin himself already outlined this model, although we find our­selves at the beginning of the road. We must use our competitive advantage and develop it.”

Energy Superpower

Russia should be an energy superpower. The energy industry is the state’s main enterprise and brings in the lion’s share of Russia’s GDP. Becoming an energy superpower requires technological improvements in the fuel-energy complex; other­wise, Russia relegates itself to the role of exporter of raw materials, at which point “we become spetsnaz, guarding their [the West’s] pipelines.” Russia already has the resources—research organizations, people, and specialists—with which to achieve technological advances in its energy sector.

As regards Russia’s strategic industries, “national is not necessarily governmental. But the fuel-energy complex, strategic communications, the financial system, and defense must be chiefly Rus­sian,” while other industries must open themselves to foreign investment.

It is necessary for Russia to control certain sec­tors in order to carve out a place in the global hier­archy. “Only the direct participation of Russian companies in the creation of global information links will be able to guarantee Russia a place in polite society. Our sovereignty and who we are in the world’s spider web [the Russian term for the Internet]—spiders or flies—depends on this.”

Another threat to Russia’s sovereignty is “soft invasions…. [T]hey blur values, declare the gov­ernment ineffective, provoke internal conflicts. ‘Orange technology’ shows this very clearly.” There is only one way to prevent a “soft invasion” or “color revolution,” and that is by creating a “nation­ally-oriented leading layer of society.”

It is also vital that Russia not give up its sovereign interests for the interests of others. Russia must par­ticipate in the global economy’s multinational corpo­rations: “multinational, not trans-, supra-, or just national. The economic future is not in the disap­pearance of great nations, but in their cooperation.”

There are problems with Russia’s business elite: namely, that many Russian businessmen take their families and assets offshore. “It is not important that he have offshore accounts, let him have them. But mentally he does not live here, in Russia, and such people will not help Russia, and they will also not take care of Russia.” Russia’s future relies on transformation of the Russian business elite into a national bourgeoisie.

Any talk of contradictions between business and government is a “delusion. Business is in contradic­tion with society, because a government official takes his cues from society.” Disavowing a populist position calling for expropriation of the assets of the rich, Russia must protect its business class, who in return must “pay taxes and respect traditions and morals.” The other element of a leading class of society is an effective bureaucracy. “The bureau­cracy must make a transition from quasi-Soviet, quasi-competent, accustomed to defeat, to a com­petitive, competent community of civil servants, because it is here that we lose in relation to the cor­poratism of other governments.”

Russia’s educational system is “not bad, but we must develop it, reorient it, and very important is that it produce a national elite.” Education is “the creation of a nation, the organization of life and the culture of the nation.”

Russia’s Enemies

Russia’s enemies are those who demand that Russia take a step back and those who demand that Russia take two steps back.

The first group are “oligarchic revanchists”— those who profited from the chaos of the Yeltsin era and are nostalgic for those times. “Whereas before­hand they influenced decisions, now, to be honest, they exercise no special influence. People have many motives for turning back the clock. There are potential leaders of this school of thought. And for­eign sponsors. Unconditionally, we cannot have a restoration of the oligarchic regime because that is a road to nowhere…leading to a great loss of sover­eignty and democracy…. But the potential danger of their return exists, we shouldn’t dismiss them.”

The second group—those who would take two steps back—are “isolationists.” They call themselves “patriots,” but one should not sully the word by using it to describe them. They are neo-Nazis. “The difficulty of establishing democracy in our country, the double standards of Western politicians stimu­late disappointment in democratic values. Secret CIA prisons in Europe, illegal use of force in Iraq, ‘orange’ revolutions in neighboring countries—these hardly contribute to the popularity of democratic ideas.” Analysis of this new “enemy list” follows.

The Role of United Russia

“United Russia’s goal is not just to win in 2007, but to think about what everyone should be doing to guarantee the domination of the party for the next 10–15 years” in order to prevent these enemy political forces from knocking Russia off its current political path.

People should engage in political debate; if you do not discuss among yourselves, how will you convince others? Forget about right and left. The party is for people of all stripes—left, right, sol­diers, teachers, businessmen. “All who aren’t against us are for us,” and efforts should be made to form coalitions, even with opposition parties.

Political discussions can be used to develop new approaches for achieving the national project. In order to educate themselves, party supporters should “study the ideological documents of the president and the party.”

[1]For a detailed summary of Surkov’s speech, see the Appendix.

[2]Vladislav Surkov, “General’naya Liniya,” Moskovskie Novosti, No. 7 (1324), March 3–9, 2006, pp. 10–11; Vladislav Surkov, “General’naya Liniya,” Moskovskie Novosti, No. 8 (1325), March 10–16, 2004, pp. 10–11.

[3]Marina Mokhovets, “The March 12 Triumph: United Russia Is Today’s CPSU,” WPS Media Monitoring Agency, March 17, 2006, at http://www.wps.ru/en/index.html (May 11, 2006).

[4]Aleksei Titkov, “Proposals for Transition to a Proportional Electoral System and the Prospects for Multi-partisanship in Russia,” Carnegie Moscow Center, May 24, 2004, athttp://www.carnegie.ru/en/pubs/media/70524.htm (May 1, 2006).

[5]For example, Rodina leader Dmitry Rogozin has appeared in a television spot calling dark-skinned migrants from the Cau­casus and Central Asia “trash” and suggesting that the streets of Moscow should be swept of such “trash.” Rodina was expected to make a strong showing in the elections, and analysts suggest that the real reason for its exclusion was to ensure electoral victory for United Russia. See Claire Bigg, “Russia: Nationalist Party Barred from Moscow Election,” Radio Free Europe/Radio Liberty, November 28, 2005, athttp://www.rferl.org/featuresarticle/2005/11/b058b58d-
c196-4cb1-b0f8-6db948f452c7.html (May 11, 2006).

[6]“Duma Set to Toughen Election Laws,” Kommersant, April 11, 2006, athttp://www.kommersant.com/page.asp?idr=1&id=665355 (May 11, 2006).

[7]Francesca Mereu, “Mayors Could Lose Their Powers,” Moscow Times, April 5, 2006, athttp://www.themoscowtimes.com/stories
/2006/04/05/002.html.

[8]Yuri Levada Analytical Center, “Putin Approval Stands at 72% in Russia,” Angus Reid Global Scan: Polls and Research, April 14, 2006, at http://www.angus-reid.com/polls/index.cfm/fuseaction
/viewItem/itemID/11551.

[9]Natalya Olenich, “The Laws of Attractiveness,” Gazeta.ru, March 13, 2006, athttp://toolkit.dialog.com/intranet/cgi/present?STYLE=739318018&PRESENT=DB=985,AN=222750
611,FM=9,SEARCH=MD.GenericSearch (May 11, 2006).

[10]Gleb Bryanski, “Ministers Call State’s Asset Grab a Threat,” The Moscow Times, April 5, 2006, at http://www.themoscowtimes.com/stories/2006/04/05/043.html.

[11]Ibid.

[12]Peggy Hollinger, “Gazprom Threat Adds to EU Fears on Supply,” Financial Times, April 20, 2006, at https://registration.ft.com/reg­istration/barrier?referer=http://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGLG,GGLG:2005-40,GGLG:en&q=hollinger+threat&location=http%3A//news.ft.com/cms/s/1bfa611c-d09c-11da-b160-0000779e2340.html (May 11, 2006).

[13]Guy Chazan, “Putin Uses Asia in Power Play on EU,” The Wall Street Journal, April 27, 2006, at http://online.wsj.com/article/SB11460
7528829736665-search.htmlKEYWORDS=Putin+Europe+gas&
COLLECTION=wsjie/6month (May 11, 2006).

[14]“Moscow Synagogue Attacker Appeals Sentence on Mental Health Grounds,” Israeli Insider.com, April 4, 2006, at http://web.israelinsider.com/Articles/Briefs/8190.htm (May 11, 2006).

[15]Claire Bigg, “Russia: Sentences in Tajik Girl’s Slaying Spark Public Outcry,” Radio Free Europe/Radio Liberty, March 31, 2006, athttp://www.rferl.org/featuresarticle/2006/03/474fe30c-
5ee2-4543-9401-f8b29f08cdbd.html (May 11, 2006).

[16]“Moscow Police Arrest Teenager in Connection with Fatal Stabbing of Armenian Student,”PRAVDA.Ru, April 24, 2006, at http://english.pravda.ru/news/hotspots/24-04-2006/79470-
Armenian-0 (May 30, 2006); see also Nick Paton Walsh, “Armenian Student Killed in Moscow Race Attack,” The Guardian, April 24, 2006, athttp://www.guardian.co.uk/russia/article/0,,1759814,00.html (May 26, 2006).

[17]“Human Rights Group Raps Russia for Tide of Racial Violence,” The Wall Street Journal, May 5, 2006, at http://online.wsj.com/article/SB114678700255544348
-search.htmlKEYWORDS=amnesty+international+
russia&COLLECTION=wsjie/6month (May 11, 2006).

[18]Lera Arsenina, “Secular Court Supports Religious Zealots,” Gazeta.ru, August 12, 2003, at http://www.gazeta.ru/2003/08/12/Secularcourt.shtml (May 11, 2006).

[19]Steve Gutterman, “Russian Lawmakers Target Jewish Groups,” Associated Press, January 25, 2005, at http://www.boston.com/news/world/europe/articles/2005/
01/25/russian_lawmakers_target_jewish_groups?mode=PF (May 25, 2006).

[20]Anatoly Medetsky, “Comrade Wolf Eats Without Listening,” The Moscow Times, May 11, 2006, at http://www.themoscowtimes.com/stories/2006/05/11/003.html.

[21]Rudiger Ahrend and William Tompson, “Russia’s Economy: Keeping Up the Good Times,” OECD Observer, October 2005, athttp://www.oecdobserver.org/news/fullstory.php/aid/1658/
Russia’s_economy_:_Keeping_up_the_good_times.html
(May 11, 2006).

On March 26, Ukraine’s voters elected 450 members to the Verkhovna Rada, Ukraine’s parliament, from an array of 45 parties and blocs. Charles Tannock, a British Member of the European Parliament (MEP), who oversaw the Parliament’s election observers, said Ukraine had passed an important test of democracy in an “exemplary” fashion. Now the difficult task of forming a ruling coalition must begin. No matter who is the next prime minister, Washington should continue to support liberalization in Ukraine and the country’s membership in the World Trade Organization and NATO.

The Emerging Coalition

The parliament now has one month from the publication of final results to assemble, two months to form a majority, and three months to nominate a cabinet.

In the newly elected Rada, the Party of Regions led by the pro-Moscow former Prime Minister Victor Yanukovich holds 186 seats; the Yulia Tymoshenko Bloc, 129; the Our Ukraine Bloc (the party of President Viktor Yushchenko now led by Prime Minister Yuri Yekhanurov), 81; the Socialist Party of Ukraine, 33; and the Communist Party of Ukraine, 21.

Together with Socialists, Our Ukraine and the Yulia Tymoshenko Bloc have enough seats to relegate Yanukovich’s Regions Party to the opposition; however, it remains unclear whether Yushchenko and Tymoshenko will be able to overcome personal animosity and forge a coalition.

Tymoshenko, formerly President Yushchenko’s ally and prime minister, has pushed publicly for a reunification of the Orange Coalition. President Yushchenko appears willing. Yushchenko may find the idea disagreeable, but it may be the only way for him to preserve his support in western Ukraine.

Tymoshenko said she is confident that “a democratic coalition will be born as we have a common vision for Ukraine’s future and for the future coalition.” That vision includes political and judicial reforms, membership in the World Trade Organization (WTO), and fighting corruption. While she would likely strengthen relations with Euro-Atlantic organizations, Tymoshenko would almost certainly complicate Ukraine’s relations with Moscow. She has pledged to annul Ukraine’s controversial gas contract with Gazprom, signed in January of this year. ?he contract grants exclusive management of Russia-Ukraine gas sales to a non-transparent “RosUkrEnergo” company.

Yushchenko and Tymoshenko do have their ideological differences. Yushchenko is a former central banker committed to liberal economic reform who has pursued a strategic course toward integration with Europe and stable relations with Russia and all of Ukraine’s neighbors. Tymoshenko is a populist who seeks to increase welfare spending and attack those businessmen who profited illicitly from the rule of former president Leonid Kuchma.

The Russian Connection

Yanukovich is expected to lead the biggest parliamentary faction and will likely play a key role in shaping Ukrainian politics—although the Orange Coalition, if revived, could keep him at bay. He has the support of the industrial magnates of eastern Ukraine and calls for closer ties with Moscow and to an end to Kiev’s bid to join NATO. Still, Yanukovich does support European Union membership for Ukraine, but this is unlikely in the near future.

Although Moscow appeared calm during Ukraine’s parliamentary-election campaign, while supporting Yanukovich, Russian President Vladimir Putin called for cooperation with Ukraine and qualified the election as a reflection of Ukrainians’ support for good relations with Russia.

According to polls conducted by the Democratic Initiatives’ Fund and the Social Monitoring Center 42 percent of Ukrainians prefer closer ties to Russia, while only a quarter support NATO membership.

It will take weeks of negotiation before the Orange Revolution parties divide up governmental posts. Hopefully, the next Ukrainian government will not be characterized by the murky practices of the Kuchma Administration or the squabbling of the first year of Yushchenko’s rule. Regardless of the color of the ruling coalition, it will face popular pressure to push through economic reform to boost growth and raise living standards.

Recommendations

The U.S. praised Ukraine’s parliamentary elections even though they were a setback for Yushchenko’s party. “The Ukrainian people have shown the world that they are committed to important ideals of economic freedom and democratic progress and open trade,” said White House spokesman Scott McClellan. “That lays the groundwork for a promising future.” The EU also expressed satisfaction with the election process and proclaimed its support for Ukraine’s ambition to continue working towards EU accession.

Now the difficult task of putting together a functioning cabinet begins. In the aftermath of the elections, it matters less who is going to be the prime minister than what policies the prime minister and his cabinet will execute. To aid Ukraine’s painful post-Soviet transition, the Bush Administration should:

• Support free market economic policies, transparency, and the rule of law. The new cabinet must learn from the mistakes of the first year of the Yushchenko Administration and implement much-needed economic and administrative reforms, such as focusing on inflation. It is important that Ukrainian voters retain their trust in democratic government. Improving the rule of law and fighting corruption will be paramount tasks.
• Boost Ukraine’s integration into global and Euro-Atlantic structures. Specific targets should include accession to the WTO, a plan for an associate membership in the European Union, and closer cooperation with NATO. While the Ukrainian electorate favors close ties with Russia, Ukraine’s future and its economic interests lie primarily in the West.

Yushchenko’s third cabinet must be more efficient, coherent, and transparent than its predecessors. Otherwise, the Ukrainian electorate could sour on the ideals of the Orange Revolution for years to come. It is not too late to restore the confidence that led Ukraine towards real democracy.

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Preventing a Russian-Georgian Military Confrontation

04-30-2006

The pending appeal of Eduard Kokoity, leader of the secessionist territory of South Ossetia, to the Russian Federation’s Constitutional Court to allow his territory to join Mother Russia could trigger destabilization in the Caucasus, sparking a Russian-Georgian military confrontation and unpredictable consequences for the region and the world. The tasks ahead for Georgia’s leaders are perilous, and they need as much assistance as Washington and other Western allies are able to offer.

Russian-Georgian relations have deteriorated to the point that some Kremlin officials are seriously weighing a military operation, which they hope will hand Georgia a military defeat and topple President Mikheil Saakashivili.

“It’s springtime—a time to start a war with Georgia,” said ? veteran foreign policy adviser who often speaks informally for the Kremlin. He mentioned Ossetia (and not secessionist Abkhazia) as the potential flashpoint.

Last week, a prominent Duma member from Vladimir Zhirinovsky’s Liberal Democratic Party concurred that a February statement by Kremlin political strategist Gleb Pavlovsky about a Saakashvili assassination was more than boasting—it was a warning.

Georgians are persistently irritating Russia. The have successfully negotiated the withdrawal of Russian military bases and are applying to join NATO. They threaten to raise objections to Russia’s membership in the World Trade Organization. And Saakashvili has asked UN Secretary-General Kofi Annan to “internationalize” peacekeeping operations in Abkhazia and Ossetia, an idea Moscow so far rejects.

Christian Ossetians, say the Russians, are Russian citizens and want to join their brethren in North Ossetia, a part of the Russian Federation. “Saakashvili is out of control, and needs to be brought to heel,” said the Kremlin’s informal spokesman. “If Georgians keep quiet and behave, we may even tolerate their joining NATO, but if they are loud, we’ll take measures.”

However, other Moscow insiders note that this rhetoric parallels invective directed against the previous Georgian president, Eduard Shevardnadze. “Russia needs to realize that it has a problem with Georgia, not with Saakashvili or Shevardnadze,” said the editor of a leading foreign policy magazine who spoke on condition of anonymity.

If Kokoity’s appeal to the Russian Constitutional Court, not known for its independence from the executive branch, is accepted and a referendum ?n formal secession and then accession  to Russia follows, Georgia might take military measures to prevent its disintegration. But such steps, Moscow hopes, would trigger a massive Ossetian response, supported by “volunteers” from the North Caucasus and beyond.

In addition to Ossetians, some also mention Ramzan Kadyrov’s Chechens. “We armed Ramzan, who now controls between five and seven thousand bayonets,” one Russian expert said. “He is eager to go to Georgia and fight—all the way to Tbilisi. He is smelling loot, and Moscow is very uneasy about his de facto pro-independence policies.”

Georgian officials now visiting Washington to coordinate Georgia’s NATO application acknowledge that Russia, upset with Tbilisi’s push to receive a NATO Membership Action Plan in the fall, is planning a “provocation.” “Russia is focused on [the] NATO issue in a negative way, which makes her more aggressive,” said Giorgi Manjgaladze, the Georgian Deputy Foreign Minister who is managing his country’s NATO accession.

However, Georgia does not desire to be dragged into a military conflict. “We will protest by diplomatic means but will not take military steps if a referendum or other provocation in South Ossetia takes place,” said Nika Rurua, Deputy Chairman of the Defense and Security Committee of the Parliament.

All members of the delegation to Washington, including Mamuka Kudava, First Deputy Minister of Defense, agree that their country is a target of a Russian “black PR campaign.” However, the Georgian delegation followed the advice of Ambassador Juri Luik, Estonian envoy to Washington, to ignore Russian threats—just as the Baltic states did in the 1990s.

But there is a fundamental difference between the Baltic accession in 1999 and Georgia’s today. First, in 1999, Russia was digging itself out from under the rubble of the 1998 economic crisis and was still adrift in the post-Yeltsin transition. Moscow had not yet made taunting America its foreign policy priority, despite efforts by then-foreign minister and prime minister Yevgeny Primakov.

Second, the Kremlin was not sitting on $200 billion in extra cash, as it is now. Today, as always, governments and bureaucracies do things not only because they need to but because they can.

Third, while Russia is still uneasy over the Baku-Tbilisi-Ceyhan main export pipeline (MEP), Gazprom is livid over the forthcoming Baku-Erzurum gas pipeline, which may allow Turkmenistan and even Kazakhstan to export gas to Ukraine and Europe, bypassing Gazprom’s pipeline network.

Finally, the Baltic candidates to NATO had strong and vociferous supporters in Poland, Hungary, and other Central European countries, as well as from powerful Central European natives living in the U.S. Georgia lacks all of these.

Russia today is determined to prevent Georgia and the Ukraine from joining NATO. The Russian military feels that it is losing face by being pushed out of its former Soviet dependencies—first from its Georgian military bases, then from Ossetia and Abkhazia, and eventually from the dachas and sanatoria along the Black Sea coast. Military leaders may even hope for promotions, decorations, and more money if the next Caucasus war erupts.

Spring does not bring political sunshine to the Caucasus this year. Georgia will need the political wisdom and support of friends in Washington and elsewhere as it negotiates the latest Ossetian crisis and the larger political minefield of the Caucasus.

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Flawed Presidential Elections in Belarus: How the West Should Respond

04-16-2006

On March 19, Belarus, the last dictatorship in Europe, will hold presidential elections. These elections occur in an atmosphere of political repression, and in all likelihood, President Aleksander Lukashenko will win an easy victory, thanks to thuggish tactics, a crooked electoral system, and a large slush fund courtesy of Russia. With Belarus’s terrible human rights record and its intimate relations with other rogue regimes, including Iran, Syria, and Saddam Hussein’s Iraq, the West cannot be complacent. The United States and the European Union should take steps to strengthen the Belarusian opposition and prod the Lukashenko regime to change course.

The country suffers from President Aleksander Lukashenko’s cult of personality and his 12 years of heavy-handed rule. Lukashenko took office in 1994 and extended his term two years later by way of an illegitimate constitutional amendment. A rigged “referendum” in 2004 abolished presidential term limits. In 2006, Lukashenko criminalized “disseminating lies” about Belarus abroad—that is, criticizing his regime and making jokes about him.

Travel in and out of the country is restricted, unexplained arrests and kangaroo courts substitute for rule of law, and citizens have little freedom of speech. Political power is concentrated in Lukashenko’s hands. Lukashenko also controls the country’s finances, circumventing parliament and his cabinet. He has even admitted to the existence of a “presidential reserve fund” containing over $1 billion.

Belarus’s relationship with Russia is key to the Lukashenko regime. Russia sells gas to Belarus at a steep discount—$46.68 per thousand cubic meters (tcm)—which Belarus then resells to Europe at or just below market rates of about $250/tcm. All proceeds go to Lukashenko’s presidential fund. These proceeds fund an extensive social safety net, assuring Lukashenko’s reelection, while keeping the population at subsistence level.

A Rogue State

Lukashenko’s friendly relations with rogue regimes, particularly his willingness to sell arms to Syria, Iran, and (until March 2003) Saddam Hussein’s Iraq, are a source of unease in the West. Belarusian exports to Iran have included tank parts, conventional weapons, and Soviet-trained Belarusian scientists to work with Iranians on uranium enrichment and the Shahab missile system. The two countries have pledged mutual support in the face of international criticism. Their close cooperation could blunt the effectiveness of sanctions on either country.

Stolen Elections

In the run-up to presidential elections, human rights abuses and political abuses have run rampant. Lukashenko has already slashed the time candidates had to fulfill eligibility requirements, criminalized criticism of his regime, and banned demonstrations. Secret police have targeted opposition groups, and hundreds have suffered arrests and prosecution as a result. While Minsk has officially invited Organization for Security and Cooperation in Europe (OSCE) election monitors, each monitor must have an invitation from the pro-Lukashenko Central Election Commission (CEE). This commission has publicly stated that the expected number of observers (700 to 800) is excessive and that no monitors from Georgia, Latvia, or Lithuania will be invited. U.S. envoy to Belarus George Krol has described the odds of these elections being free and fair as “dismal.”

Three opposition candidates are campaigning for the presidency: Sergey Haydukovich, Aleksandr Kozulin, and Aleksandr Milinkevich. Their electoral campaigns have been marred by detentions, harassment, and police beatings. On March 2, Kozulin attempted to enter the all-Belarusian People’s Congress but was beaten and arrested by police; journalists and Kozulin supporters were arrested, as well. Authorities declared illegal an election rally for Milinkevich, attended by thousands, and security forces dispersed the crowd. On March 9, members of Milinkevich’s campaign were sentenced to 15 days in prison for participating in an illegal demonstration.

Throughout the campaign season, the opposition candidates have been denied access to media outlets. The government has shut down several newspapers, and while others publish from Russia, their shipments are blocked at the border. Journalists have been beaten and harassed, and members of Lukashenko’s entourage are suspected in the disappearance of two prominent journalists investigating stories damaging to Minsk officials.

The presence of foreign media in Belarus has been insufficient to counteract Lukashenko’s methods. Belarusian-language broadcasting by Radio Free Europe/Radio Liberty is popular but not enough to compete with the state-run media.

The U.S. and countries in Europe have condemned Lukashenko’s electoral tactics. That Lukashenko will be reelected, however, is all but certain. Still, the West should support opposition forces in Belarus and the movement for future democratic change.

The Belarus Democracy Act, passed by the U.S. Congress in 2004, provides for sanctions and visa bans against Belarusian officials, freezing Belarusian assets, banning government loans and investments in Belarus, and funding for expansion of broadcasting to Belarus. Thus far, these tools have seen little use. Employed more aggressively, these measures could put pressure on Lukashenko to pursue a more democratic course.

Recommendations for the U.S. and EU

The U.S. and the EU should take several steps to promote freedom in Belarus:

• Shine a spotlight on the upcoming elections. A stronger foreign media presence will pressure Belarus to adhere to international electoral norms. Western officials, human rights activists, and non-governmental organization representatives should speak up on behalf of Belarusians to encourage the media to cover the run-up to the elections and the poll itself. To make an impact, Radio Liberty America should increase its broadcasts in Belarusian.
  
• Avoid conferring legitimacy on Lukashenko’s presidency. In the likely event that elections are not free and fair, the countries of the West should announce that they do not view Lukashenko as a legitimate head of state.
  
• Freeze Belarusian state assets in the West.
  
• Begin criminal proceedings against Lukashenko and his supporters. The regime’s more heinous acts, such as political killings, should have repercussions.
  
• Monitor Belarus’s relations with rogue states. This should also include investigation of its criminal activities, such as arms smuggling, illegal arms trading, and possibly money laundering.

Conclusion

Strong pressure for change from the democratic opposition within Belarus and from foreign countries via punitive measures against Lukashenko’s regime may prove effective in dislodging Eastern Europe’s last Soviet-style dictatorship.

U.S. Should Warn Russia Over Its "Soviet" Middle East Policy

04-06-2006

In recent weeks, Russia has distanced itself from positions on the Middle East that it once held in common with the U.S. and the European Union. In February, Russia negotiated with Iran to establish a joint uranium-enrichment venture to supply nuclear reactor fuel to the Islamic Republic. As well, it is selling anti-aircraft missiles to Syria. And on March 3, a high ranking delegation of the Hamas terrorist organization visited Moscow at Russian President Vladimir Putin’s invitation.

As Russian Foreign Minister Sergey Lavrov visits Washington to discuss the Middle East on March 6-7, Secretary of State Condoleezza Rice should inform her Russian counterpart that Moscow is playing a dangerous game in the Middle East. It is jeopardizing Russia’s G-8 presidency, its position in the Middle East Quartet, and its international standing. Russia cannot go on playing this two-faced game with the West.

Russia may have several aims in pursuing this new Middle East policy. Among them, keeping the price of oil high will certainly accrue to Russia’s short-term advantage. Russia may sense an opportunity to increase its standing in its own backyard, at the expense of the power of its putative Western allies. Most foolhardy of all, Russia may be trying to placate Islamist extremists for the sake of its own security—a policy that is doomed to fail.

Back to the Soviet Past?

As it did during theSoviet era, Russia now seeks to maximize its policy options in the Middle East while restraining the U.S.’s ability to maneuver. In the 1980s, for example, Mikhail Gorbachev’s Soviet Union became a major arms supplier to the Ayatollah Khomeini’s Iran, while also selling arms to Saddam Hussein’s Iraq, with which Iran was engaged in a long war for most of the decade.

The USSR, and later Russia, joined Iran in demanding that the U.S. withdraw its military forces from the Persian Gulf, where they ensure the security of the world’s prime oil supply and shipping lanes. A nuclear-armed Iran, closely allied with and armed by Russia and China, could challenge the U.S., its interests, and its allies in the region.

Today, Russia is the lead supplier of Iran’s civilian nuclear efforts and ignores that country’s military nuclear program. In December 2005, Russia announced that it would sell Iran $700 million worth of TOR-M1 (SA-15) short-range surface-to-air missiles and is now reportedly negotiating the sale of long-range anti-aircraft SA-10 missiles (known by their Russian designation, S-300). Buttressed by radars and computers, these missile systems could form a nationwide air-defense that would make future air strikes to disarm Iran’s nuclear weapons program all but impossible.

Russia has also sold Iran a $1.2-billion Bushehr nuclear reactor, to be completed in the fall of 2006, and plans to supply at least two more and possibly as many as five more reactors, which will cost $8 to $10 billion altogether. These reactors could be used to produce fissile material for a clandestine nuclear weapons program. In addition, Russia has trained hundreds of Iranian nuclear physicists and engineers; provided Teheran with ballistic missile technology; and launched an Iranian spy satellite.

Despite all of this, Moscow couldn’t favor the idea of an Iran armed with nuclear missiles, because it would likely seek influence in Russia’s own backyard—the Caucasus, Central Asia, and the oil-rich Caspian basin. As further evidence, Russia is placating Islamist extremists in other parts of the Middle East. Something else is at play.

Breaking Ranks with the West

Russia has broken with the joint position of the Quartet—which includes the U.S., U.N, EU, and Russia—that no negotiations with Hamas or cash assistance to a Hamas-lead Palestinian Authority will be possible until it renounces terrorism, disarms terrorist organizations, respects past agreements including the Road Map, and recognizes Israel.

During his February 2006 visit to Spain, President Putin announced that he would invite the leaders of Hamas to Moscow. He declared that Russia never considered Hamas a terrorist organization and that Hamas’ election was a great failure of President Bush’s foreign policy. Coddling Hamas, without securing a complete renunciation of terror and recognition of Israel, is simply appeasing a terrorist organization responsible for the deaths of hundreds of innocent civilians. Hamas controls veritable “brainwashing factories,” where thousands of children as young as four are conditioned to become suicide bombers. Still, Russian Chief of General Staff Yuri Baluyevsky has already suggested that Moscow will sell weapons to the Palestinian Authority lead by Hamas.

These games that Russia is playing with radical Islamists are reminiscent of those Joseph Stalin played with Hitler until the Nazis invaded USSR in 1941. Russia has already suffered atrocities at the hands of Islamist militants, such as at the Beslan school and Dubrovka theater, where hundreds of hostages, including children, died. This legitimization of Hamas is self-defeating. Appeasement will invite further Islamist aggression against Russia, especially as it is already dealing with expanding Islamist insurgencies in Chechnya and elsewhere in North Caucasus and faces a growing internal Muslim population.

Putin also broke with the West when he suggested that the media practice self-censorship in view of the row over the publication of cartoons depicting the Prophet Mohammad. Russian authorities have already closed down two newspapers for the offense of publishing similar cartoons.

Pulling Chestnuts from Middle Eastern Fires

Russia, an observer member of the Organization of Islamic Conferences, is pursuing a course that dilutes the solidarity and coordination of the G-8 and could lead to the destabilization of the Middle East. Among its troubling actions:

• Selling nuclear reactors and weapons to Iran, and anti-aircraft missiles to Syria and possibly to the Hamas-dominated PA;
• Empowering Iran to become a regional hegemon and deny U.S. access to the Gulf;
• Positioning itself to be a co-equal party alongside the U.S., while placating radical Islamist forces; and
• Stirring regional instability, which leads to higher oil prices, from which Russia benefits as a high-production oil exporter state.

A Message to Moscow

Russia should no longer be able to get away with aiding and abetting Iran and Hamas while paying lip service to solidarity with the West. During Mr. Lavrov’s visit to Washington, the Administration must make clear that Russia’s current policies will not improve its fortunes. Secretary Rice should tell Mr. Lavrov that Moscow is jeopardizing its role as a member of the Quartet and its presidency of the G-8 when it pursues a quasi-Soviet Middle Eastern foreign policy.

Russia’s Gas Attack on Ukraine: An Uneasy Truce

01-04-2006

In a compromise deal struck on January 4, the price that Ukraine pays for Russian gas will rise from $50 to $230 per one thousand cubic meters. This is less of a blow to Ukraine than it seems. The country will switch to Turkmenistan as its principal gas supplier and also purchase gas from Kazakhstan and Uzbekistan for about $95 per thousand cubic meters for five years—about a third of the price that Western Europe pays for gas. Ukraine will still buy Russian gas, but much less than in the past.

By more than quadrupling the price of Russian gas, Moscow has attempted to deal a decisive blow to President Victor Yushchenko, whom Russian leaders perceive as pro-American and anti-Russian, and to influence the outcome of Ukraine’s March parliamentary elections. Ukraine will pay a heavy price: between 5 and 10 percent of its GDP will go to cover the new energy costs, and its economic growth in 2006 and beyond could stagnate.

The attack may also have been a misstep: Russia’s willingness to excessively politicize its energy supplies delivered a blow to the country’s image as a reliable energy producer. Tens of billions of dollars in future foreign investments and contracts may be now at risk—much more than the value of Ukraine’s gas imports.

As a result of Moscow’s ill-considered gambit, Europeans are likely to turn to Turkmenistan, Azerbaijan, Algeria, Nigeria, Qatar, and Iran to diversify their gas supplies. They will be wary of over-dependence on Gazprom. Ironically, Russia, which just assumed chairmanship of the G-8, has proclaimed energy and energy security as a central focus of its term.

Blame Both Ways

Ukraine is also to blame: it ignored the problem of subsidized gas and did not prepare its economy for inevitable price hikes by increasing energy efficiency and improving management. The price of Russian gas supplied to Ukraine during 2004-2005 was less than one-third of what Europeans were paying, and it was clear that the gravy train would end after the Orange Revolution, which Russia decried.

Ukrainian leaders should have taken steps, such as creating a larger gas reserve, setting money aside to ease the transition to higher prices, and signing contracts with other suppliers. But they did not. Instead, the Yushchenko administration found itself rudderless in economic policymaking and failed to repair relations with Russia so that Moscow would give Kyiv a break, as it had in the past. Russia is now accusing Ukraine of siphoning off gas set aside for sale in Europe, something Ukraine claims it has the right to do. Ukrainian companies and officials were also allegedly reselling subsidized gas to Europe at market prices.

The new arrangement makes things even more complicated, as it hands over all Ukrainian gas imports to a Swiss-based company, RosUkrEnergo, half of which belongs to Gazprom and the other half of which is managed by the Austrian Raifeissen bank on behalf of undisclosed shareholders. There are published allegations that RosUkrEnergo is non-transparent and even may have ties to organized crime.

Recommendations for the Administration

The U.S. is interested in political stability, transparency, and economic growth in Ukraine and Central Europe. Washington has invested heavily in the Yushchenko administration and would not want it to fail prior to the crucial March parliamentary election. Voters are likely to blame an already-unpopular Mr. Yushchenko for failing to keep gas prices low.

The U.S. has also high stakes in successfully integrating Russia as a major energy supplier into the world economy—if at all possible in view of the current energy power grab by the state. Turning oil and gas into the tools of statecraft—just as the Organization of Petroleum Exporting Countries (OPEC) did in the 1970s—runs against Western interests. Furthermore, U.S. energy companies hope to expand their energy partnerships with Russia, including the development of the giant Shtokman gas field in the Barents Sea and investment in new fields such as the three Sakhalin Island projects in the Pacific.

In light of these considerations, the Bush Administration should:

• Support a gradual transition to market energy prices and better management for Ukrainian industry. This can only be accomplished by making Ukrainian industry more energy-efficient and thus, more competitive in a higher energy price environment. Such transition will save Ukrainian economy billions of dollars. U.S. Departments of Commerce and Energy and the private sector should work with the Government of Ukraine to develop and implement a three year transition program to achieve western energy consumption standards in the industry.
  
• Work with the Ukrainian government on a medium- and long-term energy security plan to diversify energy sources for Ukraine in both oil and gas. This should include a plan to purchase oil from Kazakhstan and Azerbaijan and gas from Turkmenistan and Azerbaijan, including building a trans-Caspian oil and gas pipelines.
  
• Clarify to Russia that its heavy-handed energy geopolitics will backfire. Moscow risks undermining its claim to become a major energy player in Europe and the world, hurting perspectives for joint ventures, investment, and energy trade. The U.S. Department of Energy should explain this to its Russian counterparts while promising serious U.S. energy investment if Russia returns to privatization of its oil and gas companies and pipeline consortia.
  
• Insist that Russia’s World Trade Organization accession negotiations include full separation of Gazprom’s production and transportation (pipeline) assets and that both Russian and Western private investors’ representatives on the Gazprom board of directors be fully involved in strategic decision making. Such participation would mitigate abuse of Gazprom as a tool of foreign policy by politicians and the federal bureaucracy.

Shared Interests

It is in the best interest of Russia, Europe, and the U.S. to move to a gradual schedule of price increases, energy efficiency, good management and transparency in Ukrainian economy. It is equally in Russian and the U.S. interest for all parties involved to focus on energy economics that benefits both countries, while avoiding provocation and escalation.

Competition over Eurasia: Are the U.S. and Russia on a Collision Course?

10-24-2005

Russia and the United States continue to bicker over the post-Soviet space. They often remind one of an old married couple who forever exchange accusations but never reach a common ground. Do they need counseling? Are they moving towards divorce? The potential for Russia and the U.S. to pursue a parallel foreign policy in the region--one based on interests, not emotions--is greater than many think. This, however, is often difficult to achieve.

Today, the Bush Administration’s national security priorities include Iraq, nonproliferation, the war on terrorism, Iran, China, energy, and democratization. With the exception of Iraq, all of these Administration priorities require good relations with Russia. Therefore, ties with Moscow should be high on the U.S. foreign policy agenda.

U.S. support for small countries or for the "multi-color" revolutions on the Russian periphery may be important, but it should not dictate U.S. grand strategy, which is defined by national interests. The U.S. went out of its way to support Georgia, Ukraine, and Kyrgyzstan in their pushes for democratic change. At the end of the day, however, we cannot support our friends by derailing our relations with Moscow. Nor should we shy away from the important task of promoting democracy worldwide.

Moscow’s View

Russia’s misperceptions regarding her own neighbors, as well as her misreading of many U.S. goals in the region, have made pursuing U.S. policy in Eurasia particularly difficult. For centuries, Russians viewed Ukrainians as "little brothers," heaping scorn on their attempts to pursue independence or even to develop a language and culture of their own. The Russian elite fail to recognize Ukraine’s distinct culture or the separate interests of its ruling class.

There is a deep conviction in Moscow that everyone in the neighborhood will be happy under more, not less, Russian influence. Moscow believes that the countries and peoples that it dominated for centuries are ungrateful to Russia for carrying out its mission civilisatrice and for its historic achievements--such as the defense of the Georgians from the Turks in the 18th century and the protection of Ukrainians from the Poles in the 17th--which are no longer perceived as vital or important.

Today, real concerns, such as Moscow’s support for separatism in Trans-Dniester, Abkhazia, South Ossetia, and Karabakh and business priorities such as energy transit, oil, gas and electricity supply, and migration, dictate attitudes in the "near abroad" towards Russia much more than historic memories do.

Americans often feel the Russian elites and policymakers believe that the U.S. has no business in the Commonwealth of Independent States (CIS). U.S. political agendas, such as the promotion of democracy and the establishment of military bases to pursue the war on terrorism, are easily dismissed. Moscow indicated its deep apprehension about a vital energy artery when it opposed the Baku-Tbilisi-Ceyhan pipeline from the Caspian, which after 10 years in the making will finally open for commercial operations this fall.

Washington’s View

The Cold War left its scars in Washington. Some in the U.S. still view Russia as an inherently evil imperial power, despite repeated statements by its leaders that Russia is not interested in re-creation of the Soviet Union and does not have the power, finances, or raison d’etat to pursue it. In some quarters, there are still voices which say, "We love Russia so much, we want several of them," dreaming of a Russian dissolution along regional lines: the North Caucasus, Far East, or Siberia and Iran.

These people do not recognize the danger that chaos in nuclear-armed Russia could pose for the area from the Baltic to the Pacific, from the Arctic to the Black Sea, and to the rest of the world. If Russia collapses, China and the Islamist circles which are fanning the flames of separatism in the North Caucasus will win. Nuclear weapons may fall into the hands of rogues. Extremists and criminal elements, already at large in the North Caucasus, would have a field day. This is not at all in America’s interests.

While it is not the policy of the Bush Administration to pursue Russia’s breakup, some in Moscow confuse the academic writings of former government officials with actual strategic goals. This is simply wrong. Russia, in turn, does not help by pursuing heavy-handed policies in Chechnya and elsewhere in the region--policies which alienate local populations and swell the ranks of the opposition. Tensions in the region also stem from regimes and leaders who have overstayed their welcome.

It is time to discuss and understand better what the two countries mean by "stability" and "democracy."

Challenges to Democratization

Washington is right to support democratic forces around the world, including in the former Soviet Union. Those Russian "experts" who describe the orange and other revolutions as purely artifacts "made in the U.S.A." are wrong. They do not recognize the depth of frustration with Eduard Shevardnadze’s final years of malaise or Leonid Kuchma’s pervasive corruption.

There are also those in Moscow’s "political technology" circles--paid consultants who read too much Machiavelli--who cynically deny people the right to express their opinion as to how they are governed. They state publicly that people vote for those who pay better. If that’s the case, the outcome in Ukraine would have been different. They are reminiscent of Stalin, who cynically observed that it does not matter how people vote; it only matters who counts the votes.

These are the "experts" who advocate using "all means possible"--meaning brutal force--for regimes to cling to power. We have seen the high price people have paid in places like Andijan when rulers follow this advice. We know how dictators abuse their office to enrich themselves and their families. If people perceive Russia as supportive of dictators, its popularity will plummet in Minsk, Tashkent, or Ashghabad.

This is not in Russia’s interest, any more than it is in America’s interest to support regime change for the sake of regime change or to abuse democratic processes to put into power those who spew pro-American or anti-Russian slogans. The U.S. should not support every firebrand who spouts anti-Russian rhetoric. Radical nationalist forces, which supported the Nazis in World War II, such as the Organization of Ukrainian Nationalists and Ukrainian Insurgent Army, known as OUN and UPA, are still active in Ukrainian politics. Shamil Basaev, the terrorist Chechen Islamist, and the radical Islamist Hizb-ut-Tahrir party produce plenty of anti-Russian rhetoric, but this does not mean that they are friends of the U.S.

Nor should the U.S. support self-serving carpetbaggers. It does America no good to support leaders who, once they obtain power, proceed to plunder the meager resources of their countries or argue endlessly about re-nationalization and re-privatization (meaning, who is going to get how big a cut of the pie). Such petty bickering betrays the trust that their people have placed in them.

There are also those in the U.S. whose organizational budgets and press coverage depend on supporting revolutions of different colors. They disregard that the policy outcomes of the revolutions they support may be negative for the country involved and not in line with U.S. interests. For example, radical Islamist forces coming to power through the ballot box will not contribute to U.S. security any more than did the "democratically" elected Chancellor of Germany, Adolf Hitler.

Some in Washington close their eyes to the deficits in democracy and transparency plaguing the multi-color revolutions in the post-Soviet space. However, recent events, such as the firing of the Yushchenko team in Ukraine, make it impossible to ignore the post-revolutionary flaws.

Nor does it make any sense for Moscow to blindly support "pro-Russian" regimes that are steeped in corruption and reign through oppression. Sooner or later, the abuses of dictators such as Turkmenbashi of Turkmenistan or Lukashenko of Belarus are quite likely to result in regime change. All the Russians will have done by uncritically sticking with them to the bitter end is to assure that whatever regimes follow will be, unsurprisingly, anti-Russian.

Democracy can be extremely beneficial for the newly independent states with no tradition of statehood. It can be a source of legitimate governance and provide stability after mismanagement and corruption undermine people’s faith in the government. One can argue that we are witnessing this in the Baltic States. Russia itself could benefit from appreciating and implementing democratic values and processes more than it currently does.

The countries of the post-Soviet space, however, are real countries with their own interests, and this is what some in Moscow prefer to ignore. These countries will find their diplomatic voice between Moscow, Washington, Beijing, and Brussels.

Russian Goals

Russia claims it wants stability in the post-Soviet space. President Vladimir Putin and senior Russian officials have said that they do not mind change but want it to come without violations of the law and constitutions. However, Moscow applies this paradigm to those regimes that make it uncomfortable, such as Ukraine, but not to those authoritarian states which violate their own laws and jail or kill their own citizens, such as Belarus, Turkmenistan, and Uzbekistan. Russia should work with the United States and the European Union to promote, not hinder, democracy in the CIS.

Russian military goals in the countries of the Common Security Treaty Organization (CSTO), the military bloc of the CIS, are clear: joint control of borders and air space; joint rapid reaction task forces to combat terrorism; Russian bases in Kyrgyzstan, Uzbekistan, Tajikistan, and Armenia; and no foreign bases.

Russia provides support to separatist forces and statelets, such as Trans-Dniester, Abkhazia, North Ossetia, and Karabakh. The aim of this support stems from Moscow’s long-standing desire to weaken post-Soviet states, such as Moldova, Georgia, and Azerbaijan. However, separatism may be a double-edged sword. Russia would view with extreme prejudice outside attempts to militarily strengthen Chechen, other North Caucasus, Tatar, Fenno-Ugric, or Yakut nationalists who live in the Russian territory. Those who live in glass houses should not throw stones.

Russia views itself correctly as the economic engine of the CIS. It is pushing for higher prices for its energy, which it supplies, often at a discount, to its neighbors. It also lobbies for the Common Economic Space (CES), a free trade zone and a common market for Russia, Ukraine, Belarus, and Kazakhstan. However, Moscow is not convinced that free movement of labor in the CES is desirable, and a common currency of Russian design is not likely to be introduced any time soon. Membership in the CES may also prevent these states from joining the World Trade Organization.

The Chinese Elephant in the Room

Russia seems to be oblivious to the growing power of China. Beijing has launched--and Russia has accepted--the Shanghai Cooperation Organization (SCO), which sets a precedent, committing China to fight "separatism, extremism and terrorism" in countries of the post-Soviet space.

China views Central Asia as its "near abroad," a strategic rear. As its economic muscle grows, so will its geopolitical appetites. Chinese troops will take part in maneuvers in Central Asia and will be part of the SCO rapid reaction force deployed in Central Asia, acquiring local knowledge and building relations with indigenous military forces and political elites.

China is the largest consumer of Russian military hardware and technology and is likely to surpass Russia technologically in the next couple of decades. But the giant shadow being cast by Beijing goes far beyond the purely military and security realms. It directly affects economics and business as well.

As the recent $4.18 billion acquisition of Petrokazakhstan oil company by China National Petroleum Company demonstrates, Russian energy interests may be adversely affected by China’s quest for oil and gas. China also provided a $6 billion loan to Rosneft to purchase Yuganskneftegaz, an oil asset with a capacity of 1 million barrels a day, and succeeded in derailing Japanese plans to build an oil pipeline to Nakhodka. Instead, Yuganskneftegaz is likely to get Moscow’s permission to build the pipeline to the Chinese city of Daikin, in northeastern China.

China has indicated its willingness to invest billions of dollars in Russia and Central Asia, including in strategic areas such as the Far East, Siberia, and even along the Moscow-St. Petersburg highway. However, resource-poor and population-rich China may only be a threat in the long term. In the meantime, Russia’s security and territorial integrity is under attack not from the United States, but by radical Islamist and nationalist elements in Chechnya and the North Caucasus. In fact, the U.S. can and should help Russia to fight radical Islam in that area.

Finding Common Ground

As the earlier discussion of U.S. foreign policy indicates, many of America’s goals are dependent on cooperation with Russia. These include Iran, the global war on terrorism, nonproliferation, energy, and the rise of China (not necessarily in that order). Specifically, Russia and the U.S. have to agree on a joint threat assessment. They need to realize that they are facing common threats from common sources, such as radical Islamist militants, before they can develop and implement joint policies in these areas.

Joining Forces in the War on Terrorism. While the subject of this lecture is the U.S. and Russia in the former Soviet sphere, one cannot ignore the largest "hot" conflict in that region, which is Chechnya and, increasingly, the North Caucasus where Russia’s grip is becoming more tenuous. Here, Wahhabi/Salafi madrassahs and Islamic "communities" (jama’ats), which do not recognize secular jurisdiction, are growing by leaps and bounds. Funding and ideological preparation of imams, propagandists, and military leaders comes from the same sources as those of al-Qaeda and other radical organizations in Europe, the Middle East, and elsewhere.

With Wahhabi/Salafi influence growing in Uzbekistan and inside Russia itself, in the Northern Caucasus as well as in places like Tatarstan, Bashkortostan, Azerbaijan, and even predominantly Shiite areas, the whole southern "soft underbelly" of Russia can be destabilized. Russian leaders need to recognize this. U.S. policymakers should realize that if vast lands between China and the Black Sea destabilize or fall into the hands of extremists, this will threaten U.S. security interests. Energy supply from the Caspian basin will be in danger, and terrorist access to weapons of mass destruction technology will expand.

U.S.-Russian cooperation in stemming the flow of finances, arms, preachers, and trainers is necessary. The joint U.S.-Russian Kislyak-Burns Committee on Anti-Terrorism, named after the two deputy foreign ministers who chair it, needs to expand its operations and focus on specific projects with participation of border police, banking regulators, customs officials, and security services on both sides.

Developing Energy Resources. While meeting with Western policy experts on September 5, President Vladimir Putin talked about building a pipeline from Siberia to "the North" to supply U.S. markets with Russian oil. However, Mr. Putin did not specify at which port in the Arctic Ocean the pipeline would terminate.

Ports suggested by the Russian oil pipeline monopoly Transneft freeze five to six months a year, but there exists an Artic port which stays ice-free year-round and is yearning for more cargo, including oil and gas. This is Murmansk with its huge, deep natural fjord and a large population that would welcome employment. In the meeting with President Bush on September 16 and at the 2006 G-8 Energy Security meeting in Russia, the U.S. and Russia need to agree that the pipeline will be built to Murmansk.

Moreover, President Putin did not mention which companies will develop the fields and which will comprise the consortium that will build the pipeline. Negotiating that agreement should take priority on the highest level. As the demand for hydrocarbons is high and so are prices, decisions need to be made within three to six months to ensure that deals are signed and development started.

In September, the Russian state-owned gas monopoly Gazprom shipped a tanker with liquid natural gas (LNG) to the U.S. For now, it was a trial shipment and a swap in which Russian gas was substituted by gas from a third country, but next year, Gazprom is planning to send to the U.S. five ships of LNG. Russia is inviting U.S. companies to participate in developing the giant offshore natural gas field called Shtokman. Decisions on participation also need to be made fast, as the U.S. natural gas market is experiencing shortages of supply and prices are likely to rise.

As the U.S. is expecting to boost the global oil supply through the Baku-Tbilisi-Ceyhan (BTC) Main Export Pipeline, Kazakhstani supplies to that route will be increasingly important. The U.S. can invite Russian companies to join in building a trans-Caspian pipeline to connect the giant Kazakhstani fields of Tengiz, Karachganak, and Kashagan to the BTC. A Russian stake in this project is likely to dampen Moscow’s opposition.

Balancing the China Card. Some in Russia believe that Moscow can play the China card against Washington, just as President Richard Nixon and Dr. Henry Kissinger played the China card against the USSR over 30 years ago. However, a carte blanche for Beijing may quickly limit Russia’s freedom of maneuver in the Far East, Siberia, and Central Asia. Russia’s relations with Japan are already deteriorating because of the Sino-Russian rapprochement.

Russia can put itself in an advantageous position by signaling to Beijing that it has better options than becoming China’s raw materials appendage. Seen in this light, Russia should not fear the U.S. presence in Eurasia, as a new balance-of-power game is being played there. Russia should drop its objections to U.S. military bases, such as Karshi-Khanabad in Uzbekistan, which may be evacuated in the near future, and should work closely with the U.S. and NATO to develop a new geopolitical geometry for the 21st century.

Inviting the U.S. and possibly India and Japan to expand their investments in the Far East and Siberia; joining U.S., European, Japanese, and Indian firms in large-scale investments in Central Asia--all this would enhance Russia’s freedom of maneuver vis-à-vis China. Finally, inviting the U.S. to participate as an observer in the Shanghai Cooperation Organization would help to keep this organization from becoming hostile to the U.S. and driving up tensions across the region.

Conclusion

Russia and the U.S. can benefit if they work together to address their national interests, which are less mutually exclusive than many currently think. We will benefit if we try to work together for a prosperous and democratic Eurasia, with Russia occupying a place of honor. However, the question is: Do we play a zero-sum game, a win-lose game, or a win-win game? Russia is playing a win-lose game against the U.S. but may think it is playing a win-win game with China. But are there even hieroglyphics for "win-win" in Chinese geopolitics?

In the future, does Russia want to be a member of the community of democracies or a junior partner in a coalition led by China? Talking about Eurasia, one quickly touches the third rail of the debate between Westernizers and Eurasianists, which has been going on for a century and a half. Do the Russian elites, who are culturally European, want to be politically European as well? The majority of them did a hundred years ago, as well as in the early 1990s. Does Russia want to be politically like Uzbekistan or Pakistan? Or like the U.S. and Canada? Or maybe like Korea, Taiwan, and India? After all, democracy ceased to be a Western invention a long time ago.

When the chips are down, Russia may also reassess its rapprochement with China and the cold shoulder it is increasingly providing to Washington. France and Germany are improving relations with the U.S. Shouldn’t Russia? It is not too late yet, but the sand in the geopolitical hourglass may be running out.

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Sino-Russian Military Maneuvers: A Threat to U.S. Interests in Eurasia

09-30-2005

Peace Mission 2005, the unprecedented Sino-Rus­sian joint military exercises held on August 18-25, should raise concerns in Washington. The war games are a logical outcome of the Sino-Russian Treaty of Good Neighborly Friendship and Cooperation, signed in 2001, and the shared worldview and grow­ing economic ties between the two giant powers.

Moscow and Beijing view U.S. predominance in the post-Cold War world as a threat to their power. The steadily improving Sino-Russian partnership is limiting and may significantly diminish the U.S. stra­tegic presence in the Eurasian landmass from the Pacific Ocean to the Baltic Sea.

Notwithstanding China-s and Russia-s best efforts to undermine U.S. influence in Eurasia, Washington can take some steps in the short to medium term to manage this challenge effectively. Specifically, the U.S. should:

Strengthen military, security, and economic cooperation with India and Japan, including cooperation on joint business projects in the Rus­sian Far East and Central Asia;

Secure observer status for the U.S. in the Shang­hai Cooperation Organization (SCO); and

Use U.S. public diplomacy to focus attention on the problems inherent in closer Sino-Russian relations.

The War Games

China and Russia kicked off Peace Mission 2005 at a joint ceremony in Vladivostok, just 30 miles from the North Korean border. The war games involved nearly 10,000 troops (including 1,800 Russian mil­itary personnel); scores of advanced aircraft (including Russian TU-95 and TU-22 heavy bomb­ers, which can carry cruise missiles); and army, navy, air force, marine, airborne, and logistics units from both countries.

For the first time, Russia demonstrated for the Chinese the supersonic -carrier-buster- cruise mis­sile Moskit, one of the most advanced weapons in the Russian arsenal and a weapon clearly designed to get the attention of the U.S. Navy.[1] The combined operations were conventional and looked like a preparation for a large-scale maritime landing.

The war games included large-scale troop maneuvers on China-s Shandong peninsula, located on the Yellow Sea near North Korea. However, despite the proximity to North Korea, observers should not infer that the war games are a signal to Pyongyang to make progress in the six-party talks. For their part, Moscow and Beijing have disingen­uously declared that the maneuvers are aimed at combating terrorism, extremism, and -separatism- (a veiled reference to Taiwan).[2] None of these is a credible explanation.

The Russian daily Nezavismaya Gazeta was more blunt about the purpose of the war games: -This is above all an assault on the uni-polar world that has so suited Washington since the end of the Cold War.-[3] Chinese commentators were similarly frank. Jin Canrong, professor of international rela­tions at the People-s University of China, stated that -[t]he main target is the United States. Both sides want to improve their bargaining position in terms of security, politics, and economics.[4] As Pravda.ru announced, -the reconciliation between China and Russia has been driven in part by mutual unease at U.S. power and a fear of Islamic extremism in Central Asia.-[5]

The Second Honeymoon

Relations between Russia and China have steadily improved since 1986, when Mikhail Gor­bachev was General Secretary of the Soviet Union. After the February 1989 withdrawal of Soviet troops from Afghanistan, and especially during the Yeltsin and Putin administrations, Russia emerged as China-s primary supplier of advanced weapons systems.[6] The two countries have since completed the demarcation of their borders and launched wide-scale cross-border trade.

The Moscow-Beijing axis is not unprecedented. In February 1950, China and the former Soviet Union signed a formal alliance aimed at the U.S. and its allies in Asia. The alliance reached its peak during the Korean War. Ideological strains split the alliance in 1956 after Premier and Communist Party First Secre­tary Nikita Khrushchev denounced Joseph Stalin-s crimes and rebuffed Chairman Mao Zedong-s demand to be recognized as a co-leader of the global communist movement. By 1969, Moscow had sig­naled to Washington that it intended to launch a pre­emptive strike on China-s nuclear facilities and perhaps even initiate -regime change- in Beijing.[7] The prospect of Soviet hegemony in Eurasia led Pres­ident Richard Nixon to go to China and prompted an urgent U.S. campaign to enlist China in America-s containment strategy against the Soviet superpower.

Today, however, Moscow and Beijing share a belief in a multipolar world, which means diluting American global supremacy and opposing the U.S. rhetoric of freedom and democracy. China traded support for the heavy-handed Russian tactics in Chechnya for Russian support for Chinese demands to reunite Taiwan with the mainland.[8]

Kicking Out the U.S. Military. During the July 6 summit of the Shanghai Cooperation Organiza­tion[9] in Astana, Kazakhstan, Beijing and Moscow demanded that the U.S. provide a timetable for the withdrawal of U.S. troops from Central Asia.[10] On July 31, Uzbek President Islam Karimov notified Washington that the U.S. should withdraw its forces from the Karshi-Khanabad airbase.

In other words, the anti-American axis has already begun to work. However, in the long term, by keep­ing Central Asian dictators in power, Sino-Russian efforts will likely have the perverse effect of strength­ening the cause of radical Islamists and lead to more extremism and violence in the post-Soviet Muslim areas and in China-s Xinjiang province.[11]

Iran. Both China and Russia have close relation­ships with Iran. Energy-starved China has signed a 25-year $50 billion deal to develop and import oil and liquid natural gas from the giant South Pars field in Iran. Other projects under discussion are potentially worth $200 billion. The Russian mili­tary-industrial and nuclear complex benefits from large-scale contracts with Iran, including construc­tion of the $800 million Bushehr nuclear reactor.[12] Given these economic ties, it is likely that Russia and China will veto any proposed U.N. Security Council economic sanctions on Iran for violations of the Nuclear Non-Proliferation Treaty.

Geo-economics. The growing geostrategic coop­eration between Russia and China against the U.S. in Central Asia also has a geo-economic dimension. While U.S. and other multinational major oil com­panies successfully developed large energy projects in the Caspian basin in the 1990s, China eyed oil and gas in Russia and the Caspian region to satisfy its own rapacious appetite.

China has signed deals with Kazakhstan for the construction of oil and gas pipelines, multibillion-dollar deals with Russia on long-term oil and gas supply, and an agreement with Islam Karimov to supply Uzbek gas. China is also interested in build­ing an oil pipeline from Siberia to the city of Daikin in northeast China and has bid $4.2 billion for the Canada-based PetroKazakhstan oil company.[13] To achieve its strategic goals, China is interested in keeping U.S. companies out of Eurasia and delim­iting U.S. power projection in the region.

Responding to the Challenge

The willingness of both Moscow and Beijing to participate in these joint maneuvers lies in the fact that each country now views the other as its -stra­tegic rear.- Some believe that Russia-s aims are the more benign, while China-s are worrisome to the U.S., Japan, and especially Taiwan.

Several press reports indicate that Moscow wanted to limit the recent military exercise to the Central Asian region, where the danger that pro-extremist forces might take over a national regime is highest, while China insisted that the drills be held in China opposite Taiwan.[14] The Shandong site was evidently a compromise and should not be seen as a hopeful sign that China and Russia are pressuring North Korea.[15] Finally, a Taiwanese newspaper claimed that China is apparently paying for the entire cost of the war games.[16] China is the primary instigator of Peace Mission 2005 and is paying handsomely to send a message to the United States that China is the rising power in East Asia.

Given this reality, the United States can take pru­dent steps to curtail the temptation on either side to enter into a closer alliance. The Bush Administration should expand its diplomatic dialogue in Central Asia to emphasize security and economic issues. In the context of U.S. commitments to the global war on terrorism, Central Asia must continue to be a top-tier strategic concern in Washington.

Washington needs to formulate a clear strategy to preserve U.S. influence in the region, develop energy resources, cultivate democratic reforms, and oppose authoritarianism. Specifically, the Bush Administration should:

Strengthen military, security, and economic cooperation with India and Japan, including cooperation on joint business projects in the Russian Far East and Central Asia. The Bush Administration should strengthen U.S. military cooperation with India in conventional forces, missile defense sensor and signal processing technologies, and information warfare. These are areas in which India and the U.S. could col­laborate usefully with value added to both sides. The U.S. should seek greater diplomatic and intelligence cooperation with India on security issues in Central Asia. Washington and Tokyo could expand military exercises and intelligence-gathering programs focusing on Russia and China.

Most important, however, Washington should continue to court both New Delhi and Tokyo aggressively in the economic arena-launching joint projects in oil, gas, natural resources, manufacturing, and other sectors in Russia-s Pacific Far East and in Central Asia in order to gain influence throughout the region.

Expand cooperation against radical Islamist groups and drug trafficking in Central Asia. Radical Islamist subversion in Central Asia is a threat to regional and global security. Opposing Islamist terrorism and militancy is a joint inter­est for all powers involved in the area. The U.S. Department of State and the intelligence com­munity should launch joint working groups and task forces to collect intelligence on, inter­cept the communications of, and neutralize radical Islamist organizations and drug traffick­ing operations. This can be accomplished under the umbrella of the U.S.-Russia Anti-Terrorism Working Group, co-chaired by R. Nicholas Burns, Under Secretary of State for Political Affairs, and Sergei Kislyak, Deputy Foreign Minister of Russia.

Secure observer status for the U.S. in the Shanghai Cooperation Organization. One of the current SCO members, such as Kyrgyzstan or Kazakhstan, should suggest U.S. observer­ship in the organization. To avoid a veto of such a suggestion by Moscow or Beijing, Washington should persuade friendlier hosts of future SCO summits to invite U.S. observers as a formal prerogative of the host, as well as persuade Moscow and Beijing to agree to U.S. participa­tion. Some SCO members, such as Kyrgyzstan and Kazakhstan, have already indicated that they are amenable to this.

Use U.S. public diplomacy to focus attention on the problems inherent in closer Sino- Russian relations. Russians have had many apprehensions regarding China, especially its intentions in the Russian Far East and Sibe­ria.[17] U.S. diplomats in Moscow should explain American concerns about Russian-Chinese military cooperation.[18] The State Department-s public diplomacy strategy should be to encour­age debate on Sino-Russian relations in Russia and involve the U.S. academic community, non-governmental organizations, U.S. interna­tional broadcasting, and the Russian media.

Conclusions

The balance of power in Eurasia may be chang­ing-and not in favor of the United States. How­ever, as the Sino-Russian relationship develops, the Russian bear might not be so comfortable with the Chinese dragon, at which point a renewed Russian interest in a genuine partnership with the United States may emerge. Developing a policy to address this challenge will require monitoring Sino-Rus­sian -friendly- developments and pursuing proac­tive policies aimed at preventing the bear and the dragon from getting closer.

Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies in the Douglas and Sarah Allison Center for Foreign Policy Studies, a divi­sion of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. John J. Tkacik, Jr., is Senior Research Fellow in China Policy in the Asian Studies Center at The Heritage Foundation. William Schirano, Research Assistant in the Davis Institute, assisted in preparing this report.

[1]See Agence France-Presse, -Chinese, Russian Defense Chiefs Assess Joint Exercises,- August 24, 2005, at www.defensenews. com/story.php-F=1054075&C=asiapac

(August 25, 2005). China-s Sovremenny-class destroyers are armed with Moskit cruise missiles.

[2]Al Pessin -Rumsfeld Not Concerned About Russia-China Exercises, Experts Divided,- Voice of America News, August 23, 2005, at www.voanews.com/english/2005-08-23-voa60.cfm

(August 24, 2005).

[3]Reuters, -Sino-Russian War Games Move on to China,- Yahoo! News, August 20, 2005, at news.yahoo.com/s/nm/china_russia_dc (August 24, 2005).

[4]Ibid.

[5]-Chinese, Russian First Joint Military Maneuvers Scheduled on Aug. 18-25,- Pravda.ru, August 2, 2005, at newsfromrussia. com/world/2005/08/02/60899.html

(August 24, 2005).

[6]Tung Yi, -Russian Experts Said Helping PRC Make High Tech Weaponry,- Sing Tao Jih Pao, September 6, 2000, p. A39. Areas of cooperation extend to submarine construction (including advanced models 93 and 94) and the Jian J-10 fighter jet, nuclear weapons development, cruise missiles, and jet propulsion.

[7]Henry Kissinger, The White House Years (Boston: Little Brown, 1979), p. 183.

[8]BBC Monitoring, -Sino-Russian Joint Statement Excerpts,- BBC News, December 10, 1999, at news.bbc.co.uk/1/hi/world/ monitoring/558306.stm(August 24, 2005).

[9]The SCO member states are Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Russia, and China.

[10]Robert Burns, -Kyrgyzstan: U.S. Troops Can Stay for Now,- Union Leader (New Hampshire), August 2, 2005, at www.theunionleader.com/articles_showa.html?article=58557

(August 24, 2005).

[11]Ariel Cohen, -Uzbekistan-s Eviction Notice: What Next-- Heritage Foundation Executive Memorandum No. 978, August 18, 2005, at www.heritage.org/Research/RussiaandEurasia/em978.cfm.

[12]U.S. Department of Energy, Energy Information Agency, -Iran,- March 2005, at www.eia.doe.gov/emeu/cabs/iran.html(August24, 2005).

[13]Ibid.

[14]Mark Magnier and Kim Murphy, -An Exercise Fit for Sending U.S. a Message; Joint Troop Maneuvers by China and Russia This Week Point to Wariness About America-s Strong Presence in Their Backyards, Analysts Say,- The Los Angeles Times, August 17, 2005, p. A5.

[15]Wu Min-chieh, -Choice of Venue for Military Exercises -Kills Two Birds With One Stone,-- Wen Wei Po (Hong Kong), August 19, 2005, p. 1.

[16]-China Paid for Wargames: Newspaper,- The Taipei Times, August 20, 2005, p. 4, at www.taipeitimes.com/News/world/archives/ 2005/08/20/2003268462 (September 29, 2005).

[17]See Burt Herman, -Chinese Presence Grows in Russian Far East,- Associated Press, August 24, 2005.

[18]See editorial, -U.S. Ambassador Complains to Russia RE Arms Sales to China,- International Broadcasting Board, July 29, 2002, at www.ibb.gov/editorials/10034.htm

(August 25, 2005).

‍

Uzbekistan’s Eviction Notice: What Next?

08-18-2005

On July 31, Uzbek President Islam Karimov served notice on the Pentagon that the U.S. should vacate the Karshi–Khanabad military base (K-2 in military parlance) within six months. In the post- 9/11 era, this is the first time that a U.S. ally has not only abandoned the battlefield—as Spain did in Iraq—but also shown American servicemen the door. After years of complaining that the United States has not done enough to counter terrorist threats, Karimov did what his Islamist foes have demanded all along: He demanded an end to the American “infidel” presence in Uzbekistan.

Clinging to Power. Karimov took this drastic step because he believed that the U.S. policy of support for democ­racy might lead to a “multicolor” revolution in Uzbekistan, which is predominantly Muslim but has a secular government. Indeed, Mr. Karimov’s authoritarian practices, which have left the popula­tion impoverished and intimidated, have built up internal political pressure that could lead to a social explosion and destabilization.

When Uzbek troops killed hundreds of civilian protestors while trying to put down an Islamist uprising in the city of Andijan on May 13, Wash­ington joined other Western governments in demanding an international investigation. In response, Uzbekistan limited night flights at K-2, which is located 90 miles north of the Afghanistan border. When the United States supported the evacuation of Uzbek refugees from camps in neigh­boring Kyrgyzstan to Romania, including some suspected militants—that Karimov demanded be repatriated—the curtain went down on K-2.

Geopolitical Context. In July, the Shanghai Cooperation Organization (SCO) demanded that the United States provide a timetable for the with­drawal of its forces from Central Asia. The SCO is a regional bloc dominated by Russia and China that includes all five Central Asian states, with India, Iran, and Paki­stan as observers. Beijing and Moscow are clearly using the SCO to establish their dominance between the Pacific Ocean and the Baltic Sea, as evidenced by the joint Sino–Russian military maneuvers involving 10,000 personnel scheduled for August 18–25. The SCO is also becoming a vehicle to keep dan­gerous democratic ideas out of the region. Moscow and Beijing appear to have exerted pressure on Uzbekistan and Kyrgyzstan to send the U.S. mili­tary packing, but so far only Karimov has obliged.

Although the Uzbek move ostensibly demon­strates the SCO’s power, in reality, it probably has as much to do with Karimov’s need for international protection for his regime. Russia and China are willing to disregard the human rights violations of authoritarian regimes in order to draw them into their orbit. Thus, after the Andijan massacre, Beijing greeted the visiting Karimov with a golden handshake—a $600 million natural gas contract. Moscow stated that the repression was an “internal affair” of Uzbekistan and did not join demands for an international investigation. However, Karimov will likely wake up one day and find himself being squeezed between the two giants.

What Should Be Done. The United States can continue operations in Afghanistan without K-2. In fact, Defense Secretary Donald Rumsfeld has already visited Kyrgyzstan and Tajikistan and has made arrangements for alternative bases. Manas, Kyrgyzstan, near the capital Bishkek, is likely to take the brunt of the displaced U.S. cargo air traffic and support missions. Other U.S. assets will be relocated to the Bagram and Kandahar airfields in Afghanistan.

Nevertheless, the United States is still interested in maintaining a presence in Uzbekistan—civilian and military. First, overflight rights are important. Second, the Ferghana Valley is a hotbed of Islamist unrest and needs monitoring. Third, the U.S. Drug Enforcement Administration wants to maintain a foothold.

To secure its geopolitical presence in Central Asia, the U.S. should:

• Expand military, intelligence, and law enforce­ment cooperation with the governments of Kazakhstan, Kyrgyzstan, and Tajikistan. The U.S. should strive to strengthen these countries’ military, border guard, customs, and financial control capabilities, and their ability to fight radical Islamist and terrorist organizations. Additionally, the United States should expand training programs for their military officers in the United States and conduct joint exercises.
• Secure regional access for military activities. Such access will require a diverse basing infra­structure, including some redundancy in vital regions. This, along with the correct technolog­ical investments, will ensure that America’s ability to respond to crises will not be compro­mised by local politics.
• Negotiate overflight rights with Uzbekistan. This can occur if Karimov is willing to keep the door open to future rapprochement with the United States.
• Reach out to a broad range of political forces and individuals in Uzbekistan. These should include members of the Karimov Administra­tion and the spectrum of moderate Muslims who really care about their country’s future. The U.S. should reiterate that the U.S. and Uzbekistan still share many common goals, including fighting terrorism and radicalism and supporting the independence and economic development of Uzbekistan.

Conclusion. U.S. interests in Central Asia are long-term and will not disappear with the evacua­tion of the Karshi–Khanabad military base. The U.S. needs to follow a long-term strategy that includes fighting the war against terrorism, secur­ing U.S. vital interests, and promoting freedom in Eurasia’s heartland.

‍

Time to Relaunch Ukraine’s Economic Policy

06-14-2005

Ukraine is an important American geostrategic pri­ority in Eastern Europe. Many U.S. policymakers and experts believe that Ukraine’s integration into the glo­bal economy, and Europe in particular, will change the geopolitical balance in Eastern Europe and could trigger positive changes in other post-Soviet states. Above all, it will benefit the people of Ukraine. There­fore, the outcome of Ukrainian reforms is important for U.S. foreign policy.

Since the events leading to the Orange Revolution in Kiev, the U.S. government has supported Viktor Yushchenko, who became president of Ukraine in January 2005, and his political allies. The Bush Administration has spent over $60 million on Ukrai­nian democratic transition, and the fiscal year 2005 supplemental budget includes a similar amount. However, Ukraine’s economic policy has been derailed since Yushchenko took power, for the fol­lowing reasons:

The lack of a free-market vision at the highest level of the Ukrainian government;

The breakdown of governmental economic deci­sion-making mechanisms;

An inadequate judiciary and a corrupt and ineffi­cient bureaucracy;

Continuous violation of property rights and excessively complicated taxation, which is imple­mented in an arbitrary fashion;

Anti-market and protectionist policies pursued by Prime Minister Yulia Tymoshenko; and

Insufficient integration into the global economy due to the parliament’s reluctance to pass the necessary laws.

The conflict between President Yushchenko’s pro-market declarations and his cabinet’s centraliz­ing instincts and confused performance has resulted in an economic policy that appears to be statist and populist in nature. This year’s track record lags behind 2004 economic achievements, which included gross domestic product (GDP) growth of 12 percent and an over 200 percent increase in the Ukrainian stock market.

Lackluster Performance

Key indicators of the Ukrainian economy have deteriorated since the beginning of 2005, endanger­ing the future of the Yushchenko Administration.

Macroeconomic Indicators. The results of the populist policies have been immediate. In the first four months of 2005, GDP growth plunged to an annual rate of 5 percent while inflation surged to 15 percent.[1] Construction contracted significantly, by 5.9 percent per year in the first quarter of 2005 compared to the first quarter of 2004. Metallurgy also declined by 3.6 percent in the first quarter due to increased input costs, especially energy costs.[2]

Privatization. The new government has prom­ised a new privatization deal that has prompted lengthy discussions about what should be repriva­tized and how it should be done. The government has drafted a broad law that could undo much of Ukraine’s privatization. This has endangered the property rights of thousands of enterprises.

The new government has not executed its con­troversial plans for renationalization and subse­quent reprivatization of Kryvorizhstal, Ukraine’s biggest steel mill. In an apparent exercise in cor­ruption and nepotism, the giant plant was origi­nally bought for 10 percent of its fair market value by a consortium that included then-President Leonid Kuchma’s son-in-law and close supporters of then-Prime Minister Viktor Yanukovich.

President Yushchenko has also appointed Valen­tina Semenyuk as the new privatization “czarina.” Semenyuk hails from the Socialist Party and is on record as opposing privatization.[3]

Budget and Taxation. In the first quarter of 2005, the consolidated budget had a surplus of 3.85 percent of GDP. Budget revenues increased by 31 percent, and expenditures rose by 23 percent. However, concerns remain about the government’s ability to collect enough revenue to finance its debt payments and social expenditures, including those promised by Yushchenko during his presidential campaign. These include increased benefits for the newborn and the disabled, as well as raising pen­sions and minimum wages by 42 percent in the first quarter of 2005.[4]

In March, the Rada (Ukraine’s parliament) adopted amendments to the 2005 budget envision­ing a budget deficit equal to 1.86 percent of GDP. The budget accounts for the ambitious increases in pensions and the minimum wage but uses overly optimistic estimates of revenue growth.[5] In reality, the government is scrambling to find more reve­nue. Discretionary tax exemptions have been abol­ished in a hurried and incompetent fashion. This has forced tens of thousands of small entrepreneurs to close their businesses or to shift operations into the black market economy.[6]

Policy Discord. The government does not speak with one voice. First Vice Premier Anatoly Kinakh is one of the vocal critics of the prime minister’s policies. He has publicly criticized the introduction of price controls and the imbalance between social and economic policy in the 2005 national budget.[7]

Inflation and Prices. Ukraine has the highest inflation rate in the Commonwealth of Indepen­dent States. The inflation increased from 13.3 per­cent annually in February to 14.7 percent in April.[8] According to the State Statistics Committee of Ukraine, the annual inflation rate for January–May 2005 was 14 percent, compared to 7.2 percent for the same period in 2004.

Relaxed fiscal policies and falling savings rates have encouraged greater consumption, which has led to higher food prices, including prices for meat. The government responded by imposing price con­trols on food items. Prime Minister Tymoshenko also issued a decree requiring every region to develop, present, and implement a meat produc­tion self-sufficiency program—an approach remi­niscent of Soviet-style central planning.

Ukraine is also suffering from an oil shortage, which some blame on the Russian government for blocking delivery of crude oil. However, high oil prices worldwide influenced Russian shipments.

Ukraine’s oil price controls, which order state oil companies to deliver gasoline at prices below market levels, have had disastrous effects, leaving Ukrainians queuing fruitlessly for fuel. While the price controls were in effect, only Russian-owned stations had gasoline. On May 18, President Yush­chenko signed into law a bill intended to ease a fuel supply crisis by canceling customs duties and taxes on fuel and to allow Ukraine to reduce its energy dependence on Russia. Canceling duties on imported fuel allows Ukraine to purchase oil from other exporters, such as Kazakhstan, Iran, and Iraq, at higher prices without increasing the cost to consumers. After his trip to Azerbaijan, Foreign Affairs Minister Borys Tarasyuk announced that Ukraine would be willing to buy fuel from Azerbaijan. This is in line with the pres­ident’s statement about diversifying Ukraine’s crude oil market and seeking three to four sources of crude oil for Ukraine—specifically, Russia, Kazakhstan, Azerbaijan, and Libya.[9]

Trade. First quarter exports increased by 16.8 percent over the previous year, while imports grew by 18.5 percent. Metals were the major con­tributor to export growth. However, the trade bal­ance is likely to become negative due to the appreciating hryvnia (the Ukrainian monetary unit) and cheap imports.[10]

Monetary Policy. Strong exports and foreign exchange inflows led to nominal appreciation of the hryvnia in April. In a step toward liberalizing the foreign currency market, the National Bank of Ukraine rescinded the regulation requiring the mandatory sale of 50 percent of export proceeds.[11] This is a welcome step, but more needs to be done in other areas of economic policy.

Business Reforms. The government does not seem to have a clear legislative, regulatory, or administrative strategy for the development, approval, passage, and implementation of major business reforms. Every week, there is a new plan for a new vertically integrated business company to be owned and run by the Ukraine government, and this includes the energy sec­tor.[12] The Tymoshenko cabinet does not discuss the reform of state monopolies, but instead talks about their reinforcement.

Lack of reform discourages American invest­ment, as does widespread violation of intellectual property rights. Ukraine’s software piracy rate (90 percent) is one of the highest in the world, compa­rable to the software piracy rates of Vietnam, China, and Zimbabwe.

On May 31, the Rada voted down a package of amendments to Ukraine’s intellectual property rights laws. As a result, U.S. economic sanctions, imposed in 2002, will remain in place, affecting $75 million of Ukrainian imports. In 2004, the U.S. reaffirmed the sanctions, citing Ukraine’s poor efforts to fight optical media (CDs and DVDs) piracy and trademark counterfeiting as the main reasons for sanctions. Failure to pass this legislation will also delay Ukraine’s entry into the World Trade Organization (WTO), block the U.S. Department of Commerce from granting the coveted market economy status to Ukraine, and send more nega­tive signals to foreign investors.[13]

On July 6, overcoming the rowdy opposition of the Communist and Socialist Parties, the Rada passed a law making it a crime to distribute compact disks, equipment, raw materials for their produc­tion, and moulds illegally. This law brings Ukraine closer to WTO membership. However, the Rada has adopted only five of 15 WTO-related reform bills. Three more passed the first reading, but five have failed, and two have been postponed.[14]

What Is at Stake?

The United States has much at stake in Ukraine, but it will be difficult to implement a policy of eco­nomic reform in the context of the constitutional changes that take effect in September—which shift power from president to prime minister in Septem­ber—and parliamentary elections in March 2006. If the economic policy fails, Russia will try to relaunch its own candidates for the March 2006 parliamentary elections and will attempt to bring to power its own Ukrainian prime minister, who will have more power than President Yuschenko under the new constitutional arrangement.

Economic deterioration will also discredit U.S.-supported democratization in Ukraine, and this will have repercussions beyond Ukraine. If Ukraine fails, so also may Georgia, Kyrgyzstan, and other countries of the former Soviet Union. Moreover, current economic policies discourage Western investment while allowing corrupt Ukrainian and Russian interests, accustomed to the murky waters of government-regulated transi­tional economies, to thrive.

What Should Be Done

The Bush and Yushchenko Administrations need to take action to relaunch Ukrainian economic reforms.[15] The main effort to turn the tide, how­ever, must come from the Ukrainian side. The U.S. can supply technical assistance and moral support, but the leadership and management of the eco­nomic reform process can come only from the Yushchenko Administration.

Specifically, the Yushchenko Administration should:

Create a uniform public vision of the presi­dent’s economic reforms. The government should execute and implement President Yushchenko’s vision for economic reform and creation of a positive investment environment. The plan of action should include a timetable with specific and achievable benchmarks. It should designate specific officials who will be responsible for implementing the plan. The Yushchenko Administration should formulate a single business and legal strategy, improve the institutional capacity to absorb and man­age international assistance, and centralize the process for requesting and coordinating tech­nical assistance.

Engage an outside management consulting firm to review the current government deci­sion-making and policymaking process. This could be funded as part of existing U.S. techni­cal assistance. The government, working together with such a consultancy, should use this assessment to implement a comprehensive government reform to improve the decision-making process in the economic, financial, fis­cal, and investment policy fields. Improving the government’s institutional capacity to imple­ment stable and lasting reforms will foster an environment and infrastructure that attracts foreign and internal investment.

Reduce the tax burden and enhance prop­erty rights protection and the rule of law. The Rada should begin by repealing Ukraine’s Soviet-style commercial code (also known as the economic code), adopting the Joint Stock Company Law, and abolishing all price con­trols. Significantly deregulating the economy, including removal of hidden charges and obsta­cles to start-up and small and medium busi­nesses, is also necessary.

Ukraine should reform the judicial and legal system so that it can enforce court decisions in a transparent and timely manner. It should also undertake comprehensive legal reform to facilitate economic competition and reform the administrative legislation and procedural code as recommended by the United Nations Development Programme’s Blue Ribbon Com­mission for Ukraine.[16] Such a reform would include facilitating enforcement of foreign judgments, including arbitration awards and improving bailiff service. On June 23, the Rada voted to remove the state bailiff service from the Ministry of Justice to ensure its inde­pendent function, which is a step in the right direction.[17] Finally, it should consolidate and significantly reduce social insurance taxes, as one of the ways to entice business out of the shadow economy.

Integrate Ukraine into the global economy. The Yushchenko Administration should recon­stitute an interdepartmental working group on market economy status to guide Ukrainian efforts to secure market economy status from the United States. The Ukraine government should also appoint a high-level official responsible for completing this task within a certain time frame. The government should complete, by the end of 2005, negotiations for entry into the WTO.

On the U.S. side, the Bush Administration should:

Promote Ukraine’s integration into the glo­bal economy. The Bush Administration should ask Congress to exempt Ukraine from the Jack­son–Vanik Amendment.[18] The amendment was proposed and enforced against the Soviet Union for a different purpose, and U.S.– Ukraine relations have changed radically since the collapse of the Soviet Union.

The Bush Administration should also support Ukraine’s bid to join the WTO and achieve market economy status, provided all U.S. con­cerns are resolved. The recent arrival of the U.S. government interagency delegation to Ukraine—which has been holding a series of meetings with top Ukrainian officials on Ukraine’s European and WTO integration, its market economy status, safety of the Chernobyl nuclear power plant, and HIV/AIDS—is an encouraging step forward.[19]

Conclusion

Despite time lost since the beginning of this year, it is not too late to relaunch the effort to put Ukraine on the road to economic reform, increased domestic and foreign investment, and prosperity. This effort will require bold leadership, commit­ment to economic freedom, and qualitative improvement in the rule of law and protection of property rights. If done right, U.S.–Ukrainian cooperation on economic policy will greatly benefit the peoples of both countries.

The Yushchenko Administration needs to start speaking with one voice and taking the necessary steps to make Ukraine as competitive and attractive as its Central European and Baltic neighbors. Any­thing less will be a huge disservice to the people of Ukraine who won and celebrated their freedom in Independence Square at the end of 2004. They deserve not just political liberty, but also economic freedom. The U.S. should continue to help and support Ukraine in this quest.

Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies in the Douglas and Sarah Allison Center for Foreign Policy Studies, a divi­sion of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. Heritage Foundation intern Tatyana Klimova assisted in preparing this paper. Special thanks also go to Dr. Irina Paliashvili of the Russian–Ukrainian Legal Group for her valuable comments.

[1]Anders Aslund, “Betraying a Revolution,” The Washington Post, May 18, 2005, p. A17, at www.washingtonpost.com/wp-dyn/ content/article/2005/05/17/AR2005051701326.html (July 5, 2005).

[2]Iryna Piontkivska and Edilberto L. Segura, “Ukraine Macroeconomic Situation,” SigmaBleyzer, May 2005, at sigmableyzer.com/files/Ukraine_Ec_Situation_05_05_2.pdf (June 22, 2005).

[3]“Semenyuk Prefers State Property to Private Ownership,” BBC Monitoring Service, May 18, 2005, quoted in The Action Ukraine Report No. 487, May 19, 2005.

[4]Iryna Piontkivska and Edilberto L. Segura, “Ukraine Macroeconomic Situation,” SigmaBleyzer, April 2005, at sigmableyzer.com/files/Ukraine_Ec_Situation_04_05.pdf (June 22, 2005).

[5]Ibid.

[6]Aslund, “Betraying a Revolution,” p. A17, and “Polish Investors in Ukraine Preparing Indictments for Breaches in Contracts Regarding Special Economic Zones,” Polish News Bulletin, June 14, 2005, quoted in The Action Ukraine Report No. 503, June 16, 2005.

[7]Ukrainian News Agency, “PM Tymoshenko Asking Kinakh to Be More Measured in His Comments About Cabinet of Min­isters Actions,” May 18, 2005, quoted in The Action Ukraine Report No. 487, May 19, 2005, and Interfax-Ukraine, “Kinakh Calls for Restoring Lures for Investment to Maintain Industrial Growth,” June 10, 2005, quoted in The Action Ukraine Report No. 501, June 13, 2005.

[8]Piontkivska and Segura, “Ukraine Macroeconomic Situation,” April 2005 and May 2005.

[9]A. Vasovic, “Ukraine Seeks to Reduce Energy Dependence on Russia,” AP Worldstream, May 18, 2005, quoted in The Action Ukraine Report No. 487, May 19, 2005.

[10]Piontkivska and Segura, “Ukraine Macroeconomic Situation,” May 2005.

[11]Piontkivska and Segura, “Ukraine Macroeconomic Situation,” April 2005.

[12]Ukrainian News Agency, “Pres Yushchenko States Need to Create Vertically Integrated Ukrainian National Oil Company,” May 18, 2005, quoted in The Action Ukraine Report No. 487, May 19, 2005.

[13]E. Morgan Williams, “Ukraine Parliament’s No Vote a Major Setback Regarding Possible New Major International Trade Agreements,” The Action Ukraine Report, June 13, 2005; “Verkhovna Rada Shoots Down the Law Against CD Piracy,” New Europe, June 6, 2005, quoted in The Action Ukraine Report No. 501, June 13, 2005.

[14]“Ukrainian Government Stalled over WTO Legislation,” One Plus One TV (Kiev), July 5, 2005, quoted in The Action Ukraine Report No. 516, July 6, 2005; Associated Press, “Ukraine: Rada Fails to Vote on Bills Needed to Join WTO,” July 5, 2005, quoted in The Action Ukraine Report No. 516, July 6, 2005; Ukrainian News Agency, “DPM Rybachuk: Changes of Laser Disks Legislation Compulsory Precondition for Ukraine’s Accession to WTO,” July 6, 2005, quoted in The Action Ukraine Report No. 518, July 7, 2005; Tom Warner, “Unruly Ukraine Deputies Impede Passage of WTO Legislation,” Financial Times, July 7, 2005, p. 6; Interfax-Ukraine, “Ukraine President Yushchenko Laments Parliament’s Failure to Pass WTO Bills,” July 6, 2005, quoted in The Action Ukraine Report No. 518, July 7, 2005; Interfax-Ukraine, “Ukrainian Parliament Adopts Law on CD Piracy for WTO Entry,” July 6, 2005, quoted in The Action Ukraine Report No. 518, July 7, 2005; and “WTO Obstruc­tionists,” Kyiv Post, July 7, 2005, quoted in The Action Ukraine Report No. 518, July 7, 2005

[15]Recommendations have been formulated by the U.S.–Ukraine Policy Dialogue Economic Task Force. Co-Chairs: Ariel Cohen, Senior Research Fellow, The Heritage Foundation, and Ihor Shevliakov, International Centre for Policy Studies (Kyiv). Members: E. Morgan Williams, Director, Government Affairs, Washington Office, SigmaBleyzer Private Equity Investment Group; Sergiy Kruglyk, Director of Economic Department, Ministry of Foreign Affairs; Valeriy Pyatnitskiy, Senior Adviser, Office of the Vice Prime Minister/European Integration; and John Kun, U.S.–Ukraine Foundation.

[16]United Nations Development Programme, Blue Ribbon Commission for Ukraine, Proposals for the President: A New Wave of Reform, 2005, at www.un.kiev.ua/brc/report_e/brcreport040305eng.pdf (July 7, 2005).

[17]Interfax-Ukraine,“Ukraine Parliament Votes to Make Bailiffs Independent of Justice Ministry,” June 23, 2005, quoted in The Action Ukraine Report No. 515, July 5, 2005.

[18]The Jackson–Vanik Amendment denies normal trade relations to certain countries with non-market economies that restrict emigration rights. It was originally targeted at the Soviet Union. See Wikipedia, s.v. “Jackson–Vanik Amendment,” at en.wiki­pedia.org/wiki/Jackson-Vanik_amendment (July 7, 2005).

[19]E. Morgan Williams, “Top US Government Interagency Delegation Arrives in Ukraine for a Series of Important Meetings,” The Action Ukraine Report No. 516, July 6, 2005.

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Democratization Challenges: Has Mr. Karimov Overstayed His Welcome?

06-10-2005

As the U.S. and Israel withdrew their non-essential personnel and diplomatic families from their embassies in Uzbekistan due to "specific" terror threats, the U.S. policy in Central Asia seems to be facing a fundamental challenge: How the Bush Administration can promote democratization without giving up strategic priorities of the war on Islamist terror.

In Uzbekistan and in Egypt dictators are unwilling and unable to either reform or get out. They are clinging to power -- and finding powerful allies abroad. This does not mean that the White House will beat a retreat in either Tashkent or Cairo -- vital countries both. It means, however, that the reality is more complicated than the theory of rapid democratization, and adjustment in both strategy and tactics are necessary.

The recent tragic events in Central Asia and in the Middle East teach us hard lessons. Democratization is not easy, nor is it cost-free. People die. Regimes and dictators get brutal. In the Ferghana Valley hundreds died in a heavy-handed government suppression of a popular uprising triggered by what seems to be an Islamist organization in Andijan and elsewhere.

In the Middle East, President Hosni Mubarak manipulated a referendum to prevent viable candidates to run for presidency, and security forces beat up peaceful protesters. Elsewhere, Islamists swept into municipal offices in Saudi Arabia and Gaza, while the Saudi monarchy, a friend and ally of the United States, still prevents women to vote and violates the norms of democracy across the board.

The geopolitical threat of radical Islamists coming to power through the ballot box looms large. Due to the short-sighted view of many an autocrat, secular and moderate Muslims parties and movements are banned or emasculated, pushing the opposition into the mosque or Islamic underground.

Islam Karimov’s crackdown on Erk and Birlik parties in Uzbekistan, grinding poverty, and lack of support for moderate Islam, encouraged thousands to join Hizb ut-Tahrir al-Islami (Islamic Party of Liberation, which is banned in many Middle Eastern countries, Central Asia, Russia and Germany). By destroying both the political and economic landscape, Karimov might have dug his own political grave.

However, his crackdown won kudos in both China and Russia. On a recent trip to Beijing, Karimov signed a $600 million natural gas pipeline deal -- a golden handshake. In Russia, "political technologists" such as Gleb Pavlovsky, Maxim Meyer and Modest Kolerov -- the latter in charge of the Commonwealth of Independent States Directorate in the Presidential Administration -- called for governments in Central Asia and elsewhere in the former Soviet Union to use force against the potentially rebellious population. "Governments should deny opposition the ability to escalate", pontificated Pavlovsky at the Eurasia Media Forum in Almaty in April 2005. And the mild-mannered Meyer said at the same venue that a "real power" should be able to use force to defend itself -- exactly what Mr. Karimov believes he did.

The Bush Administration is facing a dilemma: Support dictators who profess pro-American policy, or push through democratization regardless of strategic, military, energy and other geopolitical costs and concerns. The policy is congealing, but there is no consensus yet. Moreover, such consensus may be impossible. At times, acute and chronic strategic challenges may trump the best of democratic intentions. And departmental concerns may once again find the State Department and the Pentagon bickering -- or worse -- in the interagency process.

For example, at a recent conference in Washington, a senior military officer mused about deploying U.S. forces in Turkmenistan to be able to project power against Iran in case disarmament talks, currently led by France, Germany and Great Britain, fail. Civilian participants cringed, but the general remained staunchly "open-minded" to open a "dialogue" with Turkmenbashi on U.S. basing there.

On the other hand, Dr. Phillip Zelikow, Counselor to the Secretary of State, stated at a Center for Strategic and International Studies conference on U.S.-Saudi relations, that the President has looked at a possibility that Islamist forces which are not pro-American may come to power, "and he is willing to take that risk."

A senior Pentagon official, who is about to retire, said recently, that in Syria and Iran, the Administration’s policy is to encourage evolutionary, not revolutionary, change. However, what will be the course of action if the Administration comes to the conclusion that the authoritarian regimes are so resilient, that an evolutionary change is impossible -- which many in Washington believe is the case of the Karimov regime.

Beyond the Horizon

However, policy makers also need to look beyond the horizon and prepare for the future. The Moslem Brotherhood is the best-organized force in Egypt and predominantly Sunni Syria. There, the Alawite regime of the Assad dynasty, supported by roughly 10 percent of the population, has been in power since 1970. A Sunni Islamist Syria will double the power of the Iraqi Sunni insurgents, making U.S. support of the Shi’a-dominated Iraq problematic. Will the Israeli-Palestinian peace process be better off with Hamas in the driver’s seat? Will Egypt and Syria benefit under the Moslem Brotherhood rule? Will U.S. energy security be safer if Salafis come to power in Saudi Arabia?

The dilemma of the Bush Administration is, therefore, how far to push democratic change while taking into account such geopolitical concerns. And the answer one hears is: promote democracy, but go easy on friends, and push enemies hard. The question then becomes: Is Karimov a friend?

Different policy makers have different views on the subject, but most importantly, the United States has strategic interests in Uzbekistan. And these interests are jeopardized by Mr. Karimov and will be even more threatened if an anti-American Islamist force comes to power.

Uzbekistan was a key ally in the 2001 Operation Enduring Freedom, which liberated Afghanistan. A US air force base in Karshi Khanabad supports U.S. forces there. Islamists, such as Hizb ut-Tahrir and IMU, use the US presence to agitate against America and the West. They also attack Karimov for maintaining diplomatic relations with Israel.

So, what are Washington’s choices? Western powers and international organizations will no longer aid Karimov to quell future revolts. Russia, China and Kazakhstan (with its oil riches) may be supportive, fearing further destabilization. On the other hand, the fall of Uzbekistan into the hands of the Islamists will cause a geopolitical shift in Central Asia and will endanger both U.S., Chinese, and Russian presence and interests there. Russia alone may be a destination for millions of migrants from Central Asia if systemic instability escalates.

In the long run, radical Islamist strategists believe that Central Asia, with its Soviet-educated technical personnel and ample natural resources, such as gold, oil and gas, uranium, and globally competitive cotton production, may be turned into a califate (a militarized Muslim state). It may become a territorial base of jihad against the West.

To avoid a catastrophic outcome, both bilateral and multilateral solutions need to be pursued. Uzbekistan’s neighbors, the United States, European Union, OSCE and the United Nations, need to clarify to Karimov that he must find a political -- not repressive -- way out from the current crisis. Such solutions may include legalizing political parties, allowing opposition access to the media, and scheduling of popular parliamentary and presidential elections. They also may include technical assistance from the World Bank and Asian Development Bank to reform the economy, and pressure from the U.S. military to stop security cooperation if Karimov does not comply. He also should eventually be encouraged to relinquish power in the end of such political transition.

To avoid a further bloodbath and forestall expansion of radical Islam, it is important to give people hope and open the country to both political and economic modernization. Mr. Karimov has overstayed his welcome.

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The Khodorkovsky Verdict: A Setback for U.S.-Russian Relations

06-02-2005

A harsh, nine-year sentence meted out by a Russian court on May 31 against Mikhail Khodorkovsky, former owner of the YUKOS oil company, and his partner Platon Lebedev sends a chilling signal to Western and Russian investors and could disrupt U.S.-Russian relations. President George W. Bush, in an unusually blunt language, said that it seemed that Khodorkovsky “had been adjudged guilty prior to having a fair trial.” Unfortunately, that is a fair assessment.

An Expensive Affair
It did not have to be this way. The Khodorkovsky trial, which followed the destruction of YUKOS, was aimed to address the real problem of Russia’s powerful oligarchs, who were no strangers to tax evasion, political dabbling, and underhanded dealings during the 1990s. But the crackdown, in keeping with Russian history, threw the baby out with the bath water.

The lessons of the Khodorkovsky trial are just beginning to sink in. U.S. and international policy makers and business leaders now understand that the rule of law in Russia is deeply flawed. Justice there is selective. Many oligarchs likely committed the kind of crimes of which Khodorkovsky and Lebedev were accused, but no others were prosecuted.

Few in Russia deny that Khodorkovsky may have nurtured political aspirations; after all, his company did support Duma members from the two liberal opposition parties—Yabloko and Union of Right Forces—and even some Communists. However, the Kremlin’s abuse of tax authority and the criminal justice system is a massive display of force against a political foe that raises questions about separation of powers in Russia.

President Vladimir Putin’s chief of staff, Dmitry Medvedev, has admitted that the prosecution was intended to “make an example” for Russian business, which will now be chastened to pay its taxes dutifully and stay away from politics. During the trial, Putin initiated a retroactive amnesty for privatization violations of the kind Khodorkovsky was found guilty. Further, in his annual State of the Federation address, Putin criticized tax authorities’ “terrorization” of business—seemingly the same terror that brought down YUKOS with a $30 billion tax liability.

The legal proceedings against Khodorkovsky were deeply flawed, with retroactive application of the tax code, harassment of Khodorkovsky’s lawyers, and violations of criminal procedure.

In short, the prosecution of Khodorkovsky was legally arbitrary and politically capricious, and the economic response has been predictable. Russian and Western investors have voted with their feet. Capital flight quadrupled in 2004, reaching somewhere between $9 and $12 billion, according to the Russian Finance Ministry. According to Putin’s own economic advisor, Andrey Illarionov, a critic of the crackdown on YUKOS , it may be as high as $24 billion.

The government’s heavy-handed behavior also has consequences for Russian civil society. The authorities’ assault on Khodorkovsky and YUKOS led to a crackdown on Khodorkovsky’s charity, Open Russia, which supported a slew of non-government organizations promoting democracy, human rights, Internet-based education, and study abroad. The rhetoric of the Russian secret services against Western and foreign-funded NGOs has been harsh. Some were publicly accused of ties to Western intelligence services, and others have been harassed.

Squandered Opportunity
The crackdown on YUKOS and the government’s subsequent steps have destroyed the notion that Russia may develop a privately owned and financed oil sector. Such a model, if it had been allowed to flourish, would have helped Russia integrate into the global economy and brought Western investment and know-how into the Russian energy industries on a scale which is inconceivable today, with the government being the dominant player in oil and gas.

YUKOS was among the champions of privately developed oil pipelines to Murmansk and Daikin, in Northeast China. Now the Murmansk pipeline seems to be dead in the water, and Daikin has morphed into a branch off a primary pipeline projected to be built across Siberia to the Pacific port of Nakhodka. Controlling the project is the government owned pipeline monopolist Transneft.

The government has quickly consolidated power in the energy sector. Yugansk, the main production asset of YUKOS, was auctioned off in an opaque procedure in December 2004 to a fly-by-night corporate shell and then quickly transferred to Rosneft, a government-controlled oil company. This spring, tax authorities initiated a $1 billion tax claim against TNK, the Russian partner in a $6 billion joint venture with British Petroleum called TNK-BP, so far (and perhaps for some time) the largest Western investment in Russia. Exxon has announced that it will freeze investments in the Sakhalin island oil projects after Russian Ministry of Energy requested the company to pay an additional $1 billion. Natural Resources Minister Yurii Trutnev announced in February that a number of attractive mineral projects will be closed to Western investors. He was seconded by Putin, who called for a “strategic sectors” law to bar foreign investment from selected industries. Finally, the Russian government now plans to acquire over 10 percent of the gas monopoly GAZPROM, which will give it formal control of the gas sector, as well. In this context, the YUKOS affair and the Khodorkovsky verdict are only part of of the Russian state’s re-consolidation of the “commanding heights” of the economy—a troubling trend.

Currently, foreign investment in the Russian energy sector is falling, efficiency in the sector is declining, and production, which until 2003 grew by leaps and bounds, has plateaued.

Conclusion

The U.S. and the West need to recognize that Russia has changed. The U.S. and Russia still have important joint interests, such as preventing Iran from becoming a nuclear armed power, joint efforts to secure Russian nuclear materials and other weapons of mass destruction , the war on terrorism, and economic cooperation. But the lack of transparency, deficiencies in the rule of law, and threats to property rights and political diversity are making the U.S.-Russian relations increasingly strained—and economic cooperation ever more difficult.

UZBEKISTAN: A POLICY PROVING GROUND FOR WASHINGTON

05-31-2005

The Andijan events in Uzbekistan have sharpened the debate among policy makers in Washington over whether American support for Uzbek President Islam Karimov helps or hurts US national security interests. Many in Washington have grown disenchanted with Karimov’s authoritarian methods. However, some continue to view the Uzbek leader as a bulwark against Islamic radicals in Central Asia.

On May 29, three US senators visited the Uzbek capital Tashkent and condemned the Karimov administration’s handling of the Andijan events, which began May 13. [For background see the Eurasia Insight archive]. Uzbek authorities insist that Islamic militants started the Andijan confrontation, in which, according to the official death toll, 173 people died, including 36 Uzbek soldiers. Human rights groups say at least 750 people were killed during the Andijan events, and allege that Tashkent has engaged in a cover-up concerning the extent of the violence used against largely unarmed civilians. [For background see the Eurasia Insight archive].

One of the visiting American senators, John McCain, an Arizona Republican, repeated calls for an independent investigation into what he termed the Andijan “massacre.” In addition, McCain pointedly refused to concur with the Uzbek government view that the Andijan protests were started by Islamic terrorists. [For background see the Eurasia Insight archive]. Karimov has rejected the demand for an independent investigation.

The Andijan events have helped turn Uzbekistan into a proving ground for competing US foreign policy priorities. One the one hand, Karimov remains an ally of the United States, having helped Washington in its prosecution of the anti-terrorism campaign by making an Uzbek air base available to the American armed forces. [For background see the Eurasia Insight archive]. On the other, Karimov has shown himself to be inimical to the global democratization trend advocated by US President George W. Bush. [For background see the Eurasia Insight archive].

Washington insiders are now struggling with the question: which policy should be prioritized? Should the United States support a dictator who has pursued a generally pro-American policy? Or, should Washington promote democratization regardless of the strategic, military, energy and other geopolitical costs? No consensus has yet emerged in Washington on this issue, and none may ever develop. Even so, the Bush administration may have to make a choice, and many Washington analysts believe that strategic necessity will probably trump the best of democratic intentions.

The Uzbek dilemma could reignite a turf battle among the State Department, the Pentagon and other US governmental agencies. The Defense Department clearly has no qualms about allying with dictators in the pursuit of enhanced US security. For example, at a recent conference in Washington, a senior military officer raised the possibility of deploying US forces to Turkmenistan. Such a deployment, the officer theorized, could exert pressure on Iran to agree to and comply with international demands concerning Tehran’s nuclear program. [For additional information see the Eurasia Insight archive]. Civilian conference participants cringed at the Turkmen base suggestion, but the US officer remained staunchly “open-minded” about opening a “dialogue” with Turkmen leader Saparmurat Niyazov on base possibilities.

The officer seemed to ignore the fact that Turkmenistan has adhered to a policy of neutrality during the post-Soviet era, as well as the fact that Niyazov has acted in recent years to shut the country off from outside influences, and thus it would be highly unlikely for Ashgabat to agree to any kind of basing arrangement. Niyazov sits atop what is generally recognized as one of the most despotic regimes in the world. [For background see the Eurasia Insight archives].

The State Department appears to retain hope that Bush will press ahead with his democratization goals. Phillip Zelikow, an adviser to Secretary of State Condoleezza Rice, stated at a Center for Strategic and International Studies conference on US-Saudi relations that Bush was aware of the possibility that Islamist forces which are not pro-American may come to power amid the democratization trend, “and he is willing to take that risk.”

Many US policy-makers believe that pressure, both bilateral and multilateral, must be exerted on Karimov in order to compel the Uzbek government to implement long-promised political and economic reforms. Such reforms could include giving opposition political parties, including Erk, Birlik and the Sunshine Coalition, greater room for maneuver, and the loosening of state control over mass media. [For additional information see the Eurasia Insight archive]. On a bilateral level, the Bush administration could possibly make continued strategic cooperation with Uzbekistan conditional on Tashkent’s implementation of a reform blueprint.

While the best available option may be to press Karimov to reform, a significant number of Washington analysts believe that the Uzbek president is incapable of changing. This inability to open up Uzbekistan’s political and economic systems is detrimental to US security interests, as Karimov’s continued reliance on force pushes Uzbeks, out of desperation, to resort to violence, and possibly embrace Islamic radicalism. As a result, distaste for Karimov seems to be growing in Washington, and many wouldn’t mind seeing a new leader in Tashkent, provided that stability could be maintained.

At present, though, US officials probably can’t abandon Karimov because of the credibility of the Islamic radical threat. Indeed, if Karimov’s administration collapses there is no force outside of Islamic radicals that could stand a chance of filling the power vacuum.

Helping to restrict US options is the fact that both Russia and China are providing staunch support for Karimov. On his recent visit to Beijing, Karimov was rewarded with a $600 million natural gas pipeline deal. Such assistance certainly serves as a disincentive for Karimov to make domestic changes, and lessens whatever leverage that the United States has with Tashkent.

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Challenge in Uzbekistan

05-18-2005

With more than 500 dead in Andijan, a city in the impoverished and overpopulated Fergana Valley, a hotbed of Islamic extremism in Uzbekistan, the face of Central Asia has changed forever. Brittle relations between the government of President Islam Karimov and his people are bloodstained.

The city is quiet -- a graveyard quiet. President Islam Karimov’s government, its heavy-handed tactics, and a deliberate provocation by Akramia, a local Islamic organization, appear to be at fault for the massacre.

According to the sketchy media reports, hundreds of people were killed and many other wounded. Hundreds, if not thousands became refugees in the neighboring Kyrgyzstan.
Western observers should be careful not to mistake this for one of these peaceful "multi-color" revolutions which occurred from Belgrade to Bishkek in the last three years. The violence, even if quelled for now, may re-ignite -- with unpredictable consequences in this tinderbox of a region.

Uzbekistan, its neighbors, along with other world powers, need to find a way out of this crisis -- and fast. The main challenge for the Uzbeks and the U.S. is how to move along the road to political reform without allowing Islamists to take over.
Akramia is named after its founder, Akram Yuldashev, who has been in and out of jail on charges of Islamic extremism. Public evidence of his group’s terrorist activities is sparse. However, the recent operation in Andijan, which included seizing a military base and disarming a contingent of government troops seems well-planned, and executed without regard to civilian casualties. Moreover, the threat of radical Islam in Central Asia -- and especially in impoverished and radicalized Fergana Valley, which straddles Uzbekistan and Kyrgyzstan -- is significant and growing.
The Islamic Movement of Uzbekistan (IMU) has links to al Qaeda and directed terror attacks in the 1990s. It suffered setbacks fighting alongside Usama bin Laden in Afghan-istan and its leader, Juma Namangani, was killed. Another leader, Tahir Yuldashev (no relation to Akram), survived and is now hiding in Pakistan.

Another key player may be the global, clandestine radical Islamist party, Hizb ut-Tahrir al Islami (Party of Islamic Liberation), which is recruiting supporters by a thousand. Hizb’s goal: creation of a worldwide Califate, a military dictatorship based on Shari’a law, and Holy War (jihad) against Land of the Sword -- that is, the West.
Central Asia, according to Hizb, is ripe for an Islamist revolution because of its corrupt "infidel" regimes and U.S. presence due to the war in Afghanistan. The region, with its natural resources such as uranium mines, is as good of a bridgehead in global jihad as any. Hizb has declared democracy is un-Islamic but is likely to take part in any popular uprising.
If President Islam Karimov -- a Soviet-era secular authoritarian leader -- does not negotiate with the secular and moderate opposition, the uprising could spread.
Uzbekistan is a quintessence of everything wrong with post-communist Central Asian regimes. Since the Soviet collapse, the country has never had legitimate elected leaders, or postcommunist democratic institutions. Instead, it stagnated.

Mr. Karimov took over when Moscow stopped taking phone calls. The elites remained the worst of Soviet Central Asia -- riven by a combination of clan allegiances, corruption and an inability or unwillingness to reform and modernize.

The people of Uzbekistan are sick and tired of Mr. Karimov. Today he is opposed by a combination of Islamist organizations and secular opposition parties and movements. These include the Erk and Birlik parties, which are largely secular, urban and middle class. However, the Uzbek opposition has not one recognized leader, such as Victor Yushchenko in Ukraine or Mikheil Saakashvili of Georgia.
Uzbekistan is now on the brink. It is strategically located in an area that has known much bloodshed and little democracy. In 1992, ethnic Uzbeks and Kyrgyz were at each other’s throats in Osh, with deaths reaching 2,000. A civil war that resulted from a split between northern and southern clans in Tajikistan took more than 100,000 lives after the Soviet collapse.
The United States has strategic interests in Uzbekistan and should follow the situation closely. The country was a key ally in the 2001 Operation Enduring Freedom that liberated Afghanistan. A U.S. air force base in Khanabad is just one of the American sites in the country. Islamists use U.S. presence to agitate against America and the West. They also attack Karimov for maintaining diplomatic relations with Israel.
Russia and Western powers and international organizations will think twice before aiding Karimov to quell the revolt. Meanwhile, China and Kazakhstan, with its oil riches, are nervously watching developments in Andijan.
A fall of Uzbekistan into the hands of the Islamists would cause a geopolitical shift in Central Asia and endanger both U.S. and Russian interests there. In the long run, radical Islamist strategists believe Central Asia, with its Soviet-educated technical personnel and ample natural resources -- gold, oil and gas, uranium, and globally competitive cotton production -- will emerge as a militarized Muslim state: a califate. They see it becoming an anti-Western jihad territorial base.
To avoid that catastrophe, Uzbekistan’s neighbors and the United States, Russia, China, European Union, the Organization for Security and Cooperation in Europe, and the United Nations should prod Mr. Karimov to find a way out of the current crisis. This may include legalizing political parties, giving opposition access to the media, and scheduling elections. Parliamentary elections could take place before presidential ones, and Mr. Karimov should be encouraged to transfer power thereafter.
To avoid the political expansion of radical Islam, it is important Uzbekistan’s people have hope and that the country open to modernization. But the time left for Uzbekistan to change course may be running out. Decisive action is needed now.

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The Uzbekistan Dilemma

05-13-2005

With over 500 dead in Andijian, a hotbed of Islamic extremism in the impoverished and overpopulated Fergana Valley in Uzbekistan, the face of Central Asia is changed. Akramia, an allegedly radical Islamic group, appears to be behind the uprising against President Islam Karimov’s government. The government’s heavy-handed tactics and deliberate provocation by Akramia appear to be at fault for the massacre.

According to the sketchy media reports, hundreds have been killed and many others wounded. Thousands have fled to neighboring Kyrgyzstan. Western observers should be careful not to mistake this for one of these peaceful “multi-color” revolutions that have occurred from Belgrade to Bishkek over the last three years. The violence, even if now quelled, could reignite at any time. The main challenge now for the Uzbeks and the U.S. is to find a way out of this crisis—and fast.

Akramia is named after its founder, Akram Yuldashev, who has been in and out of jail on various charges (fabricated, the group claims). It is not clear exactly how extremist the organization really is—reports vary. Public evidence of its terrorist activities is sparse. However, the recent operation in Andijan, which included seizing a military base and disarming a contingent of government troops, seems to have been well-planned and executed without regard to civilian casualties. The threat of radical Islam in Central Asia—and especially in impoverished and radicalized Fergana Valley, which straddles Uzbekistan and Kyrgyzstan—is significant and growing.

The Islamic Movement of Uzbekistan (IMU) has links to Al Qaeda and directed terror attacks in the 1990s. It suffered setbacks fighting alongside Usama bin Laden in Afghanistan and its leader, Juma Namangani, was killed. Another leader, Tahir Yuldashev, survived and is now hiding in Pakistan.

Another key player may be the global, clandestine radical Islamist party Hizb ut-Tahrir al Islami (Party of Islamic Liberation), which is recruiting supporters by the thousand. Hizb’s goal: creation of a worldwide Califate, a military dictatorship based on Shari’a law, and Holy War (jihad) against Land of the Sword—that is, the West.

Central Asia, according to Hizb, is ripe for an Islamist revolution because of its corrupt “infidel” regimes and U.S. presence due to the war in Afghanistan. The region, with its natural resources such as uranium mines, is as good of a bridgehead in global jihad as any. Hizb has declared that democracy is un-Islamic but is likely to take part in any popular uprising.

If President Islam Karimov, a Soviet-era secular authoritarian leader, does not negotiate with the secular and moderate opposition, the uprising could spread.

Uzbekistan today is a quintessence of everything that is wrong with post-communist Central Asian regimes. Since the Soviet Union collapsed, the country has never had a “velvet revolution,” legitimate elected leaders, or post-communist democratic institutions. Instead, it has stagnated.

Karimov took over when Moscow stopped taking phone calls. The elites remained the worst of Soviet Central Asian—driven by a combination of clan allegiances, corruption, and an inability or unwillingness to reform and modernize.

The people of Uzbekistan are sick and tired of Karimov. Today he is opposed by a combination of Islamist organizations and secular opposition parties and movements. These include the Erk and Birlik parties, which are largely secular, urban, and middle class. However, the Uzbek opposition does not have one recognized leader, such as Victor Yushchenko in Ukraine or Mikheil Saakashvili of Georgia, and so even a pro-Karimov could have a chance to succeed him.

Uzbekistan is now on the brink. It is strategically located in an area that has known much bloodshed and little, if any, democracy. In 1992, ethnic Uzbeks and Kyrgyz were at each other’s throats in Osh, with the death toll reaching 2,000. And a civil war that resulted from a split between northern and southern clans in Tajikistan took over 100,000 lives after the Soviet collapse.

The United States has strategic interests in Uzbekistan and should follow the situation closely. The country was a key ally in the 2001 Operation Enduring Freedom that liberated Afghanistan. A U.S. air force base in Khanabad is just one of the American sites in the country. Islamists use the U.S. presence to agitate against America and the West. They also attack Karimov for maintaining diplomatic relations with Israel.

Russia and possibly Western powers and international organizations will think twice before aiding Karimov to quell the revolt. Meanwhile, China and Kazakhstan, with its oil riches, are nervously watching developments in Andijan. All should keep a close watch, at the least. Uzbekistan’s falling into the hands of the Islamists will cause a geopolitical shift in Central Asia and endanger both U.S. and Russian interests there. In the long run, radical Islamist strategists believe that Central Asia, with its Soviet-educated technical personnel and ample natural resources—including gold, oil and gas, uranium, and globally competitive cotton production—will emerge as a militarized Muslim state. They foresee it as a territorial base of jihad against the West.

To avoid that catastrophic outcome, Uzbekistan’s neighbors and the United States, Russia, China, European Union, OSCE, and the United Nations should prod Karimov to find a way out of the current crisis. This may include legalizing political parties, giving opposition access to the media, and scheduling elections. Parliamentary elections could take place before presidential ones, and Mr. Karimov should be encouraged to transfer power thereafter.

To avoid the political expansion of radical Islam, it is important that the people of Uzbekistan have hope and that the country open itself to modernization. But the time left for Uzbekistan to change course may be running out. Decisive action is needed now.

On the road to Moscow

05-08-2005

President George W. Bush’s visit to Latvia, Russia and the Republic of Georgia underscores how much the geopolitical landscape changed 13 years after the collapse of the Soviet Empire.

In Riga, Mr. Bush will address leaders of Estonia, Latvia and Lithuania. These are America’s new allies -- members of North Atlantic Treaty Organization. They are also members of the European Union. Russia is an ex-rival and a strategic partner, a vague term indeed. Georgia (and neighboring Azerbaijan) are emerging allies.

In Riga, Mr. Bush should avoid new dividing lines in Europe, but call for recognition of Latvian and Estonian borders by Russia and the signing of a peace treaty. The president should also tell people of the Baltic States that their well-earned and much-deserved freedom should not be dishonored by occasional expressions of sympathy to Nazis or by discriminatory measures against the Russian population.
Mr. Bush should also acknowledge our new allies’ great achievements in making the transition to democracy and market economy and integration into NATO. He should remember a new generation has come of age, which did not suffer from Soviet occupation and is not as pro-American as its parents. The president should remind these young people the U.S. supported Baltic independence and never recognized Soviet annexation. The task now is to keep these young people friends of America.
Presidential challenges in Russia are different. He should address Russia’s people through press conferences and in the meeting with democracy activists.
He should acknowledge the great sacrifices of the peoples of Russia and the former Soviet Union in World War Two -- a topic most dear to every Russian’s heart. Josef Stalin no doubt enabled Adolf Hitler to start the war, and the Soviet regime then was as bloodthirsty as the Nazis. Stalin also destroyed the top Soviet generals and was criminally negligent and oblivious to the coming Nazi attack -- Operation Barbarossa, which started in June 1941. In it, millions of Soviet soldiers were surrounded and whole field armies destroyed.
It was, however, the blood and heroism of Russians, Ukrainians, Tatars, Jews, Georgians and others who stopped the Nazi war machine. Battles of Stalingrad and Kursk broke the backbone of the Wehrmacht. The strategic gifts of Marshal Georgi Zhukov helped a lot. Still, Soviets lost 25 million sons and daughters.
Mr. Bush can also remind his audience that the victories of the Red Army were due to a large degree to Franklin D. Roosevelt’s "lend-lease" program: Studebaker trucks, Cobra fighter planes, SPAM and GI boots.
Today, the president should say, the United States and Russia face a new enemy: implacable Islamist terrorism coveting weapons of mass destruction (WMD). In talks with Mr. Putin, Mr. Bush should advance joint anti-proliferation efforts, such as the Nunn-Lugar program worth up to $1 billion a year aimed at securing and destroying the creaky Russian WMD arsenal and related materials.
The United States and Russia should work on ways to prevent Iran from obtaining nuclear weapons. While Tehran can hit Russian soil, it still lacks the missile capability to strike the U.S. The two leaders should also discuss the future challenges U.S. and Russia may face from assertive and resource-hungry China.
The president should extend a helping hand to the Russian people. America can help address Russia’s catastrophic social trends: an HIV/AIDS and tuberculosis epidemics and a male life expectancy of 58-59 years -- behind that of Egypt.
Russia suffers from a wave of alcoholism, drugs and related illnesses, and the abortion rate remains among the highest in the world. This is not about geopolitics, it is about helping Russians lead healthier, happier lives.
In meeting with Russia’s democracy activists, President Bush should explain why America promotes democracy around the world. Without stentorian lectures, Mr. Bush should explain why smooth and bloodless transition from one power elite to another benefits Russia, why free media helps fight corruption, why transparency and the rule of law attract foreign investment. If Russia wants to modernize, it needs to liberalize. It is in the Russian national interest to be free. The United States can help -- if the Russians want it to.
Finally, a speech at the Independence Square in Tbilisi is a great opportunity to look into the future. Mr. Bush should acknowledge Georgia’s accomplishments in its Rose Revolution, a bloodless pro-democracy power change. He should express America’s -- and the world’s -- firm hope that Georgia will remain on the democratic path and its territorial integrity and sovereignty be restored. U.S. should support return of secessionist Abkhazia and South Ossetia to Georgia’s fold, and withdrawal of Russian military bases from Georgian soil.
Further, President Bush should demand the end to "frozen conflicts" between Armenia and Azerbaijan in Nagorno-Karabakh and in Transnistria in Moldova. These conflicts lasted too long, and make everyone miserable and unable to economically develop.
Finally, the president should express our hope the right will be respected of the region’s peoples -- from Belarus to Turkmenistan to Uzbekistan -- to elect their leaders. Tbilisi will be a terrific place to launch a new campaign for a better future in the former Soviet area, a future where dignity, the rule of law, civil society, economic development and freedom prevail.

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President Bush’s Messages to the Baltic States, Russia, and Georgia

05-04-2005

President George W. Bush’s visit to Latvia, Russia, and Georgia underscores how much the geopolitical landscape in that part of the world has changed in the 13 years since the collapse of the Soviet Empire. In Riga, Bush will speak to the leaders of Estonia, Latvia, and Lithuania, now members of North Atlantic Treaty Organization and European Union and strong allies of America. Bush’s second stop, Russia, once a rival, is now a strategic partner—an appropriately vague term, to be sure. Georgia, the President’s final stop, and neighboring Azerbaijan are emerging allies. The President must convey different messages to the people and leaders of each country, while promoting American foreign policy and security interests.

In Riga, Bush should acknowledge our new allies’ great achievements in transitioning to democracy, adopting market economies, and becoming a part of NATO. But he must remember that each of these countries has raised a younger generation that doesn’t remember Soviet occupation and is not as pro-American as its parents. This generation needs to know that the U.S. was firm in its support of Baltic independence and never recognized Soviet annexation. The task now is to keep these young people friends of America.

While Bush should avoid creating new dividing lines in Europe, he should still call for Russian recognition of Latvian and Estonian borders and for Russia to finally sign a peace treaty with them. The President could also tell the people of the Baltic states that their well-earned and much-deserved freedom should not be dishonored by expressions of sympathy to Nazis or by discrimination against their Russian populations.

Russia presents different challenges. The President should address the people of Russia through the usual press conferences and also by meeting with democracy activists. He will likely address the great sacrifices of the peoples of Russia and the former Soviet Union in World War Two—a topic dear to every Russian’s heart.

Joseph Stalin was no doubt Adolph Hitler’s enabler in starting the war, and the Soviet regime then was as bloodthirsty as the Nazis. Stalin removed the top Soviet generals and was criminally negligent and oblivious to the coming Nazi attack—Operation Barbarossa, which started in June 1941. Soon millions of Soviet soldiers were surrounded, and whole field armies were destroyed.

It was, however, the blood and heroism of millions of Russians, Ukrainians, Tatars, Jews, Georgians, and others who stopped the Nazi war machine. The battles for Stalingrad and Kursk broke the backbone of the Wehrmacht. Marshal Georgii Zhukov’s gift for strategy helped a lot. Still, the Soviets lost 25 million of their sons and daughters.

Bush can remind his audience that the Red Army’s World War II victories were due in part to Franklin D. Roosevelt’s “lend-lease” program: Studebaker trucks, Cobra fighter planes, SPAM, and GI boots all played crucial roles.

Today the U.S. and Russia face a new enemy: implacable Islamist terrorists coveting weapons of mass destruction (WMD). In talks with Putin, Bush should advance joint efforts against proliferation, such as the Nunn-Lugar program that spends up to $1 billion per year to secure and destroy the creaky Russian WMD arsenal and related materials. The U.S. and Russia should work together to prevent Iran from obtaining nuclear weapons. While Teheran still lacks the missile capability to strike the U.S., it could hit Russian soil today. The two leaders should also discuss challenges the U.S. and Russia may face in the future from an assertive and resource-hungry China.

America can also help the Russian people address several catastrophic social trends: HIV/AIDS and tuberculosis epidemics and male life expectancy that has fallen to just 58 to 59 years—lower than even in Egypt. Russia suffers from waves of alcoholism, drug addiction, and related illnesses, and its abortion rate is among the highest in the world. This is not about geopolitics but helping Russians to lead healthier, happier lives.

When meeting with Russia’s democracy activists, President Bush should explain why America is promoting democracy around the world. Without stentorian lectures, Bush can explain how democracy benefits Russia, why free media helps fight corruption, and how transparency and the rule of law attract foreign investment. If Russia wants to modernize, it needs to liberalize. It is in the Russian national interest to be free. The U.S. can help—if Russians want it to.

Finally, his speech at the Independence Square in Tbilisi will be a great opportunity for the President to address the future. Bush should acknowledge Georgia’s Rose Revolution, a bloodless victory for democracy. He should express America’s and the world’s hopes that Georgia will remain on the democratic path and that its territorial integrity and sovereignty will be restored. The U.S. should support the return of secessionist Abkhazia and South Ossetia to Georgia’s fold and the withdrawal of Russian military forces from Georgian soil.

Further, President Bush should demand an end to the “frozen conflicts” between Armenia and Azerbaijan in Nagorno-Karabakh and in Transnistria in Moldova. These conflicts have gone on for too long and leave all sides miserable and impoverished.

Finally, the President should express hope that peoples of the region—from Belarus to Turkmenistan to Uzbekistan—will have their right to elect their leaders respected. Tbilisi would be a terrific location to launch a new campaign for a better future in the former Soviet area, a future where dignity, the rule of law, civil society, economic development, and freedom prevail.

North Caucasus at Risk

04-10-2005

Since the March 8 death of Aslan Maskhadov, former president of Chechnya and supreme commander of Chechen militant forces, Russia has escalated its anti-terrorism operations in the North Caucasus region.
Last Tuesday, Russian security forces apprehended Adam Jabrailov, a Chechen terrorist responsible for capturing, killing and beheading four Red Cross workers in 1996.
Details of Maskhadov’s death remain murky. While he had limited control of the Chechen Islamist faction led by warlord Shamil Basaev, during the unilateral January 2005 cease-fire, most Chechen factions observed the truce in support of a call for peace talks with the Kremlin. However, sources close to the Russian leadership indicated in Moscow last week the Kremlin is opting for a military crackdown and leadership elimination.

Maskhadov’s legacy is complex. He was a former Soviet Army colonel cut from the same cloth as many Russian leaders and could have been a peace settlement partner. But he commanded military operations and achieved Chechnya’s near-sovereignty under the Khasav-Yurt accords (1997).
During his presidency, he allowed Chechnya’s frightful transformation into Sharia-dominated anarchy. In 1997-1999, the years of Chechnya’s quasi-independence, the region became an Islamist terrorist training ground and saw 2,000 kidnappings for ransom, slave trade and massive trafficking in weapons, drugs and stolen goods. Maskhadov couldn’t -- or wouldn’t -- stop any of it.
Maskhadov publicly distanced himself from mass hostage-taking operations by the jihadi warlord Shamil Basaev, such as the Dubrovka Theater and the Beslan school attack in September 2004. Nevertheless, Maskhadov took no steps to prevent such atrocities. On the contrary, in his latest interviews he advocated expansion of the "jihad" beyond Chechnya, to the rest of Northern Caucasus, and targeting Russian civilians.
The formal Maskhadov’s successor is a little-known Islamic law figure ("Sheik") Abdul Halim Sadullaev. Not known for religious learning or military prowess, he apparently was Maskhadov’s appointed successor to keep Basaev from formally taking power and to threaten Moscow with chaos if it decided to eliminate Maskhadov. Russian sources report Sheik Abdul-Halim issued fatwas allowing murder and terror attacks.
Mr. Putin needed a great victory as his popularity began to deteriorate after Beslan and mass protests of unpopular cash payments introduced in January to replace social in-kind benefits. The secret service, the FSB, produced such a coup.
One year after Vladimir Putin handily won a second presidential term, his domestic and foreign challenges are snowballing, and his aura of almost superhuman invincibility is quickly dissipating.
Analysts in Moscow speculate he is repeating the mistakes of the czars who brutally suppressed the Chechens. In 1850, Nicholas I ordered his Caucasus viceroy, Prince Michael Vorontsov, to "firmly follow my system of destruction of dwellings and food supply, and bothering them with incursions."
Leo Tolstoy, the great Russian writer who served in the Caucasus in the mid-19th as a military officer, had this to say about the reactions in Chechnya in his classic "Haji Murat":
"Nobody even discussed hatred toward the Russians. The feeling that all Chechens experienced, from a child to a grown up, was stronger than hatred. It was not hate, but the lack of recognition of these Russian dogs as human beings. It was such a revulsion, disgust and noncomprehension, facing the irrational cruelty of these creatures, that the desire to exterminate them was a natural feeling, as natural as the instinct of self-preservation. [This] was like the desire to exterminate vermin, poisonous spiders and wolves."
With Maskhadov’s killing, Moscow lost an opportunity to split the Chechens between the more secular supporters of national independence or broad autonomy, and radical Islamist "jihadi" terrorists. But it seems the Kremlin did not believe such an option was available and equated Maskhadov with Basaev.
Ironically, the radical Islamists do not want an independent Chechnya, as Maskhadov did. They want nothing less than a Califate, which would subsume Chechen national aspirations in favor of a pan-Islamic agenda of a Muslim superstate.
Now, according to London’s Sunday Times, the radical Islamist wing, led by Basaev and a Saudi warlord Abu Havs, which rejects diplomacy and hails jihad, and the Russian security forces and the military, will dictate the scope and pace of the North Caucasus war. Unfortunately, the likelihood also will increase of terror mega-attacks, like the September 2004 horror in a Beslan school. Quickly killing or capturing Basaev is an imperative for the Russian forces.
Islamist terrorists, with their global networks of financial support and training, would want nothing more than to have Basaev as de-facto supreme military commander of North Caucasus -- without Maskhadov’s meddling. Basaev already trains and equips jihadi units, which grew out of North Caucasus Wahhabi madrassas networks. Fighting there is on the rise.
The North Caucasus Islamist movement and its allies believe their geopolitical goal -- creating the North Caucasus Califate, a militaristic Sharia-based dictatorship between the Black Sea and the Caspian -- just got a bit closer.
If they succeed, a disastrous scenario unfolds. Such an entity on Europe’s doorstep, controlled by ideological soulmates of Osama bin Laden, will radiate terrorism and religious extremism for decades to come. It may become one of the greatest threats to Eurasian security of this century.
Russiawide terrorism will escalate, as will "jihad" in the Russian-controlled republics of North Caucasus, where security forces increasingly impose political controls and the Kremlin moves toward setting up its loyalists as presidents and governors. A secular Shi’ite regime of Azerbaijan and its oil fields, and pipelines from the Caspian basin, will also be more prone to terrorist attacks.
It is time the United States paid attention to the threats escalating in the Northern Caucasus.

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Helping Kyrgyzstan’s Democratic Revolution

03-24-2005

The people of Kyrgyzstan have spoken—and acted. On Thursday, they stormed presidential headquarters and government buildings in the capital Bishkek in response to rigged parliamentary elections, and the government appears to be losing its grip on power. The Supreme Court has since annulled the elections, and the country is likely to return to the polls shortly. Still, Kyrgyzstan may face the prospects of civil war and possible disintegration if President Askar Akaev does not resign. In turn, turmoil in Kyrgyzstan could bring inter-ethnic and political violence to its larger neighbors, Uzbekistan and Kazakhstan, and lead to their destabilization. To prevent this outcome and win another victory for democracy, the U.S. and its allies convince President Akaev to step down—and soon.

A Model of Authoritarian Ills

The present unrest was not inevitable. In the early 1990s, mountainous and poor Kyrgyzstan was hailed as an oasis of democracy in Central Asia where freedom of speech flowered. The United States bestowed WTO membership and World Bank credits, but the country remained poor and corrupt.

In the mid-1990s, Kyrgyzstan began its long descent into authoritarianism. Askar Akaev, a respected physicist, was elected president in 1990 and has managed to hold that post thanks to changes to Kyrgyzstan’s constitution. Since the mid-1990s, his government has become increasingly hostile to political opposition, harassing supporters and holding questionable elections. International observers challenged elections in 1995 and 2000 as not up to standards, and Akaev’s government began to crack down on independent media and opposition parties. A recent referendum, also contested, gave Akaev greater powers and eliminated party-list voting—weakening the opposition further.

In early 2001, President Akaev jailed Felix Kulov, his former vice president who had challenged him for presidency. Protesters now have released him. Akaev’s Prime Minister Kurmanbek Bakiev resigned in 2002 after troops shot six peaceful protesters and now is emerging as the top opposition leader. Roza Otunbaeva, the former Foreign Minister whom he banned from running for parliament in favor of his daughter, is among his toughest critics.

Having never gone through a “velvet revolution,” Kyrgyzstan’s political elite remains essentially Soviet, with addition of some small traders and criminals, as well. Its opposition leaders are very much of the national nomenklatura—and not dissidents like Lech Walensa in Poland or Vaclav Havel in Czechoslovakia. But they are still the standard-bearers of popular discontent with the ruling family’s corruption and are pushing for more democracy than Akaev cares to grant. If successful, the opposition is likely to inject new blood into the country’s corrupt body politic.

They have some reason to be optimistic. A wave of democracy is sweeping the former Soviet Union. The Kyrgyz call it the Tulip Revolution or the Lemon Revolution, echoing similar movements in Georgia and Ukraine. Given reports that President Akaev fled the country, the opposition has the chance to make lemonade out of a lemon of an election. In two rounds of Kyrgyzstani elections held over the past month, President Akaev has packed the parliament with cronies and relatives, including his son and daughter. Observers from the Organization for Security and Cooperation in Europe (OSCE) and U.S. say the elections were flawed.

Following the second round, the opposition took over the south of the country, including the second and third largest cities, Osh and Jalal-Abad, and protests have since spread elsewhere. The opposition demands a rerun, like in Ukraine, and Akaev’s immediate resignation, like in Georgia.

But this was not Akaev’s plan. According to reports, Akaev is no longer interested in the presidency. His once-sterling reputation as a democrat, philosopher, and writer has understandably withered. But Akaev’s influential wife and family, who have enriched themselves during his rule, are egging him to stay on. He may still try to change the constitution and run for a fourth term in October, something most Kyrgyz oppose. Akaev calls opposition leaders “criminals” and “externally inspired,” echoing closely the words of Ukraine’s former Prime Minister Viktor Yanukovich before he gave into opposition demands for a fair election. All signs are that Akaev is unlikely to stand down now without significant prodding.

Danger Lurks

The leaders of neighboring Uzbekistan and Turkmenistan are nervously watching these developments. As in Kyrgyzstan, both countries’ ruling regimes are prone to cut down opposition, mostly secular, as quickly as it appears. But a greater menace may be lurking in the wings: Islamic radicals who are amassing power and, for now, have been holding back from the political square. By cutting the secular opposition out of the picture, the region’s leaders may be pursuing a counterproductive—and ultimately destructive—strategy.

In Kyrgyzstan and Uzbekistan, a clandestine radical Islamist party known as Hizb ut-Tahrir al-Islami (Party of Islamic Liberation) is recruiting supporters by the thousand. Two prominent Kyrgyz politicians, including the country’s ombudsman, are Hizb supporters. Hizb’s goal is creation of a worldwide Califate—a military dictatorship based on Shari’a law—and it is dedicated to waging the Holy War (jihad) against the West. Central Asia, according to Hizb, is nearly ripe for Islamist revolution because of its corrupt “infidel” regimes and the U.S. presence in Afghanistan. Central Asia, with its natural resources like uranium mines, is as good a bridgehead as any for global jihad. Hizb has boycotted elections and calls democracy un-Islamic. It is likely, however, to join in any popular uprising—which may happen if Kyrgyzstan’s Akaev does not change tactics and negotiate with the opposition.

Such widespread unrest may destabilize Uzbekistan to the south, with its large Islamist opposition, and the oil-rich Kazakhstan to the north. Both are afraid that the unrest will spill over to Muslim Turks in their countries, many of whom are poor.

Ethnic unrest is also a possibility. In 1992, ethnic Uzbeks and Kyrgyz clashed in Osh, with the death toll reaching 2,000. Moreover, the split between Kyrgyzstan’s North and South is significant— just like the chasm between East and West in Ukraine or the split between northern and southern clans in Tajikistan. There, a 1992-1997 civil war took over 100,000 lives.

Quick Solution Needed

Three things must happen—and soon—to avoid a catastrophic outcome in the region:

Kyrgyzstan’s neighbors, the United States, European Union, OSCE, United Nations, and possibly Russia, must convince Akaev to resign and help the opposition find a quick and bloodless way out of the current crisis.

New parliamentary elections must be held—with a strong presence of international election observers.

Free, fair, and transparent presidential elections should take place, with international support and supervision.
The people of Kyrgyzstan have shown that they are unwilling to accept the status quo. They deserve better and should have the chance to build a more democratic, equitable, and accountable republic. With international support, they have the chance to accomplish these goals.

From Lemon Revolution to Lemonade?

03-24-2005

The people of Kyrgyzstan have spoken -- and acted.

As they storm presidential palace and government buildings in the capital Bishkek, the government is paralyzed and impotent. The resignation of President Askar Akaev is the best way out of the crisis. Otherwise, the country will be facing a civil war, a bloody uprising, a possible disintegration, or all of the above. What’s more, turmoil in Kyrgyzstan may destabilize its large neighbors, Uzbekistan and Kazakhstan, with catastrophic consequences of inter-ethnic and political violence.

To prevent bloodshed, the US and its allies must act quickly to convince President Akaev to step down or be shunned by the international community.

Akaev’s secular opposition has already taken over the south of the country, including the two largest cities Osh and Jalalabad, and is poised to march on the capital Bishkek which is bracing for a large protest this weekend. In response, Akaev calls his opponents "criminals" and foreign agents. He has refused to cancel deeply flawed parliamentary elections or resign. Messrs. Leonid Kuchma, the former President of Ukraine, and Victor Yanukovich, his Prime Minister defeated by Victor Yushchenko in the Orange Revolution, used to do the same in Kyiv.

It didn’t have to be like that. In the early 1990s, mountainous and poor Kyrgyzstan was hailed as an oasis of democracy. The US bestowed WTO membership and World Bank credits, but the country remained poor and corrupt. In early 2001 Akaev jailed Felix Kulov, his former vice-president, for challenging him for the presidency.

His former Prime Minister Kurmanbek Bakiev resigned in 2002 after government troops shot up six peaceful protesters, and now is an opposition leader. Roza Otunbaeva, the former Foreign Minister whom he banned from running for parliament in favor of his daughter, is among his toughest critics.

Kyrgyzstan today is a quintessence of everything that is wrong with post-communist Central Asian regimes, although it is hardly the worst offender. It did not have its "velvet revolution". The elites are essentially Soviet, with a sprinkle of small traders and criminals. Today’s opposition leaders are very much the national nomenklatura -- not dissidents like Lech Walensa and Vaclav Havel. But they are leaders of popular discontent with the ruling family’s corruption and want more democracy than Akaev is willing to grant. They are also likely to inject new blood into the corrupt body politic.

The situation in neighboring Uzbekistan and totalitarian Turkmenistan is even worse: there, the regimes are knocking down any opposition that appears on the horizon. However, they may be digging their own graves, a senior Bush administration National Security Council official says. The current opposition movements in Central Asia are likely to depose the authoritarian ruler and bring new secular elites to power, with at least a chance for democratic development. The Islamists, who are lurking in the background, have a whole different plan: a Shari’a (Islamic Law)-based state which will be a base of Jihad against other infidel regimes in the region.

In Kyrgyzstan and especially in Uzbekistan a global, clandestine radical Islamist party, Hizb ut-Tahrir al Islami (Party of Islamic Liberation), is recruiting supporters by the thousand. Two prominent Kyrgyz politicians are Hizb supporters. Hizb’s goal: creation of a worldwide Califate, a military dictatorship based on Shari’a law, and dedicated to waging the Holy War (jihad) against the West.

Central Asia, according to Hizb, is getting ripe for an Islamist revolution because of its corrupt "infidel" regimes and US presence due to the war in Afghanistan. Central Asia, with its natural resources, including uranium mines, is as good of a bridgehead in global jihad as any. Hizb has declared that democracy is un-Islamic, but is likely to take part in any popular uprising, which is likely to happen if Akaev does not negotiate with the opposition.

A wave of democratic uprisings is sweeping the former Soviet Union. The Kyrgyz call it the Tulip, or Lemon, Revolution -- similar to Georgia’s Rose one and Ukraine’s Orange. But there are no guarantees the Kyrgyz will make lemonade out of this lemon. The two rounds of Kyrgyzstani elections took place February 27 and March 13. In these polls, Akaev packed the parliament with cronies and relatives, including his son and daughter. OSCE and US observers called the elections flawed. The opposition demanded another election (like in Ukraine) and Akaev’s immediate resignation (like in Georgia).

According to his entourage, Akaev was considering changing the Constitution for the second time and running for a third term in October, something most Kyrgyz oppose.

Akaev, who is in power since 1991, is tired and not really interested in the presidency, but is egged on to stay by his influential wife and the family, who enriched themselves during his rule. His once-sterling reputation as a democrat, philosopher and writer has shrunk like Dorian Gray’s picture.

Last Monday, a senior Kyrgyz official visiting Washington could not answer this writer’s question: why is Akaev afraid of the opposition’s demand to rerun the elections in a clean way, with numerous foreign observers present? After all, if he enjoys popular support as he claims, there is nothing to worry about. He should also clearly commit not to run in October. The Kyrgyz opposition does not have one recognized leader, such as Victor Yushchenko in Ukraine, or Mikheil Saakashvili of Georgia, so a pro-Akaev candidate may have a chance.

Central Asia has been on the brink of violence before. In 1992, ethnic Uzbeks and Kyrgyz were at each other’s throats in Osh, with the death toll reaching 2,000. Moreover, the split between the North and South in Kyrgyzstan is significant, like the chasm between East and West in Ukraine, or the split between the northern and southern clans in Tajikistan. There, the 1992-1997 civil war took over 100,000 lives.

Uzbekistan and Kazakhstan are nervously watching developments in the small neighboring republic. They are afraid that the unrest will spill over to their poor Muslim Turkic population.

To avoid a catastrophic outcome, Kyrgyzstan’s neighbors, the United States, the European Union, OSCE, the United Nations and Russia, need to pressure Akaev to leave in order to let the opposition find a bloodless way out from the current crisis. It is time to let the Kyrgyz people enjoy their freedom.

The Other Inauguration

01-21-2005

President Victor Yuschenko’s inauguration on Sunday January 23 is not the end of the road: it is the beginning of a fundamentally new relationship between the US and the West, and Ukraine. Washington needs to throw a lifeline to Kyiv to complete the historic transformation and to build the democratic and free Ukraine of the 21st century.

The exhilarating Orange Revolution has demonstrated the deep desire of its people for honest, responsive and democratic government. This was a drama worthy of the 1989 scenes in Wenceslas Square in Prague and Solidarity’s surge to freedom in Poland. Victor Yushchenko’s heroic victory in the third round of presidential elections on December 26, 2004, now raises the question of what’s the most effective Western support to make the Ukrainian post-election transition a success. The Bush Administration should facilitate Ukraine’s membership in WTO, lift Jackson-Vanik trade restrictions, encourage Ukraine’s EU membership, expand NATO’s cooperation with Kyiv, offer a bridging loan for economic restructuring; and state unequivocally that US will not tolerate threats to Ukraine’s territorial integrity.

Post-election challenges. With 52% of the vote, Yushchenko will face multiple challenges. His primary concerns include the polarized electorate; calls for regional autonomy; decrepit, value subtracting, rust-belt coal and steel industries in the East; and the opposition of protectionist oligarchs, apparatchiks and thugs. What’s more, 44 percent of voters favored Prime Minister Victor Yanukovich, an ex-con who promised to tighten Ukraine’s ties with Russia, make Russian the second official language, and introduce dual citizenship. Ukrainian oligarchs -- Yanukovich’s supporters and main beneficiaries of the economic links with Russia -- may launch a political opposition that will be difficult to overcome. If Russia retaliates by banning its large Ukrainian guest work force, Yushchenko’s popularity may suffer. Finally, Ukraine finds itself in the epicenter of the East-West strategic competition. The Orange Revolution opened the door to Ukraine’s European reintegration. Russia’s influence in the country declined, though Ukraine’s relations with its gigantic neighbor remain a long-term constant and a national priority.

Implications for the West. The US and the EU demonstrated policy coordination over Ukraine, which is rare in the post-Iraq world. However, after the revolution the EU has proceeded with caution. The EU now has to face its future relations with Ukraine in addition to the difficult accession of Turkey. The EU may pursue a good-neighbor policy, sign an associate member status agreement, or explore an outright membership which may take 10-15 years to achieve. Ukraine-NATO relations are another promising direction for cooperation. NATO is a leading Western organization to ensure Ukraine’s Western integration, as well as to restore a greater cohesion in transatlantic foreign policy. However, Ukrainian membership may cause friction in the US-Russian, EU-Russian, and Ukraine-Russian relations.

The US has supported the triumph of democracy in Ukraine and is interested in having Ukraine stable, prosperous and integrating in Euro-Atlantic structures. US also extensively cooperated with the European Union, achieving a unified position in support of Ukraine’s transformation -- an important post-Iraq achievement. At the same time, the US relationship with Russia is also important, as the Bush Administration seeks President Vladimir Putin’s support on future diplomatic action on Iran; reconstruction of Iraq; non-proliferation; counter-terrorism and energy cooperation. Support of Ukraine should not damage this relationship.

Supporting Ukraine. The US has to provide support for Ukraine’s integration with the West; encourage the EU to take Ukraine in, and preserve a working relationship with Russia. Therefore, integration into European institutions and bolstering of an assistance package to Ukraine are the proper approaches for the US Ukraine policy.

The Bush Administration should convince the 109th Congress to repeal the Jackson Vanik Amendment’s as it applies to Ukraine. The Amendment, which curbs normal trade status, is an irrelevant legacy of the Cold War as far as Ukraine is concerned.

The State Department should encourage the EU to sign an associate membership agreement with Ukraine and begin preliminary consultations on accession, including the exact date of the start of negotiation.

The Pentagon should expand NATO’s Partnership for Peace program to further modernize Ukraine’s military; promote civilian control over the military; explore a "trusted ally" non-member relationship; and eventually consider Ukraine’s membership in the Alliance.

The Treasury and the State Departments should work with and through the international financial institutions (IFIs) such as the World Bank and International Monetary Fund to diversify Ukraine’s Soviet-era heavy industries and provide, if necessary, a bridging loan to shut down unprofitable mines.

The US should help the Yushchenko Administration develop a comprehensive package of reforms in the rule of law and legal reform. It should include privatization; expansion of free trade; and reducing and simplifying taxation. Civil service overhaul, including law enforcement, is key to restore Ukrainians’ trust in the state.

Washington should help Kyiv promote regionally focused export-oriented projects in Ukraine; and should foster technical assistance and cooperation with the private sector to make Ukraine a foreign investment magnet.

Prior to the Bush-Putin summit in Slovakia scheduled for February 24, the State Department should find an opportunity to mention that that the US fully endorses territorial integrity of Ukraine. The US should clarify to the Kremlin that the US support of Ukraine is not aimed at hurting Russian political and economic interests there (such as the Russian naval base in Sevastopol), investment, energy transit to Europe, overflight, etc.

Finally, The White House should work with the Yushchenko Administration to reverse pre-election promises to withdraw the Ukrainian contingent from Iraq, which is the fourth-largest one in the US-led coalition.

Ukraine has presented a renewed opportunity for the US engagement in the region. Washington should demonstrate unwavering political support for Ukraine’s pursuit of its democratic aspirations. An ongoing, cohesive transatlantic US foreign policy towards Ukraine should be at the core of the Bush Administration support for Ukraine.

The Lessons of Ukraine: Russia’s Growing Influence in Eurasia

11-12-2004

The outcome of the Ukrainian presidential elections could dramatically increase Moscow’s influence in Eurasia. If former Prime Minister Victor Yanukovich (the Kremlin’s preferred candidate) is elected, the Kremlin would virtually control the Ukrainian presidency. That would allow Russia to exercise greater geopolitical influence in Ukraine and would increase Moscow’s political momentum in the rest of Eurasia.

The biggest challenges for the U.S. are to keep Russia in the anti-terrorism coalition and to ensure continued access to Russian energy resources, while supporting the sovereignty and territorial integrity of all post-Soviet states. To these ends, the U.S. should boost cooperation with these countries and expand the dialogue with Moscow about contentious issues, such as South Ossetia and Abkhazia and the U.S. presence in Central Asia. In Ukraine, the Bush Administration should assist Ukrainian groups that are committed to democracy, free markets, and Euro-Atlantic integration by providing diplomatic, financial, and media support.

The First Round
According to the government-controlled Central Electoral Commission, Yanukovich received 40.12 percent of the vote in the first round of the presidential election. Opposition leader Victor Yushchenko received 39.15 percent. However, European observers and independent pollsters gave the victory to Yushchenko by 4 percent to 6 percent. Widespread election fraud and Yushchenko’s lack of access to the government-controlled media could also give Yanukovich a "win" in the run-off election on November 21.

The U.S. has a strategic interest in preserving Ukraine’s sovereignty and keeping the democratic process on track, while preventing Russian influence from growing further. The U.S. has warned that it may impose selective visa bans on Ukrainian officials involved in election fraud, but this may not prevent fraud in the run-off.

Russia’s Ascendancy
The Soviet-educated Russian elite, which generally views the U.S. as a strategic adversary, may challenge the sovereignty of or pursue increased control over the post-Soviet states by overtly supporting pro-Moscow candidates. In the process, undermine long-term U.S. interests in developing democratic, globally integrated states in Eurasia.

There are two reasons for the Kremlin’s ascendancy in Ukraine. First, according to published accounts in Moscow and Kiev, the Kremlin has poured unprecedented resources into the election campaign--at least $200 million from sympathetic Russian and Ukrainian businessmen. Second, Russia has access to the Soviet-era criminal files of Yanukovich, who was jailed twice for aggravated assault and robbery. According to Moscow experts, Yanukovich’s criminal past creates a relationship of a case officer and an "asset" between Russian President Vladimir Putin and Yanukovich.

Ukraine’s Significance
Ukraine should be viewed in the larger context of the recent negative regional dynamics. Before the elections, at Moscow’s request, President Leonid Kuchma and Yanukovich engineered changes in Ukraine’s military doctrine and turned away from NATO and EU integration. On October 17, Belarussian President Alexander Lukashenka pulled off an unconstitutional power grab in Belarus. The stalemate in Moldova about the secessionist Transdniestr region continues. In the Caucasus, Moscow is undermining Georgian independence by creeping annexation of Abkhazia and South Ossetia.

Ukraine is crucial to the Kremlin because it is a large-scale demonstration that Russia can reestablish influence in the former empire and expand its access to the Black Sea and Southeastern Europe, including the Balkans. Russia has deliberately focused on detaching Ukraine from its Western ties and making it dependent on Moscow.

Implications for Eurasia
If Russia successfully consolidates control over Belarus and Ukraine while derailing a peaceful resolution in Moldova, Moscow may also be encouraged to pursue greater control over Caspian oil. It could do so by increasing pressure on Kazakhstan, possibly through its Russian-speaking minority, and it could eventually move to secure Azerbaijan’s compliance with the Kremlin regional policy.

Moscow has also utilized secessionist enclaves to advance its "near abroad" policy. Beyond that, it may further undermine pro-American Georgian President Mikheil Saakashvili and pressure Uzbekistan to return to the Russia-led bloc. However, as the Beslan tragedy demonstrated, Russian military power is still limited in its ability to counter real security threats. Such ambitious policy may stoke imperial hubris in Russia--with unpredictable consequences.

What the Bush Administration Should Do
The biggest U.S. challenges are to keep Russia in the anti-terrorism coalition and to ensure access to Russian energy resources, while keeping the former Soviet republics sovereign and independent. Furthermore, the tools in the U.S. diplomatic toolbox are limited. Russia is flush with oil revenue and no longer needs Western economic assistance, and it can easily obtain the financing and needed advanced technology for oil exploration on the open market. In this context, the Bush Administration should:

Support Ukrainian groups that are committed to democracy, free markets, and Euro-Atlantic integration by providing diplomatic, financial, and media support.
Support sovereignty and territorial integrity of all post-Soviet states by expanding cooperation via NATO’s Partnership for Peace, bilateral military-to-military ties, exchanges, train-and-equip programs, and even limited troop deployment where necessary.
Expand high-level diplomatic dialogue with Moscow about contentious issues, such as South Ossetia and Abkhazia and the U.S. presence in Central Asia.
Conclusions
Recent developments in Iraq and elsewhere in the Middle East will require the President’s attention and will likely limit American freedom of maneuver in Eurasia. The muted U.S. responses to recent power shifts in Ukraine and Belarus demonstrate that the U.S. is unwilling to challenge Moscow’s growing influence. However, the long-term geopolitical outcome in Eurasia will depend on Washington’s engagement in the region, on Russia and the U.S agreeing on the "traffic rules" in Eurasia, and on Moscow abandoning its anti-American policy in and beyond the territory of the former Soviet Union.

Russia’s Gravitational Pull in Eurasia Stands to Strengthen After Ukraine Election

11-10-2004

The outcome of Ukraine’s contentious presidential vote could have far-reaching ramifications for the US-Russian geopolitical competition in Central Asia and the Caucasus. An election victory by Prime Minister Viktor Yanukovich, who is widely viewed as Russia’s preferred candidate, could embolden Kremlin efforts to enhance its position in the energy-rich Caspian Basin.

Yanukovich is set to face opposition candidate Viktor Yushchenko, a Western-oriented reformer, in a run-off vote on November 21. Since the first round of voting October 31, campaigning has been marked by acrimony, with both sides hurling allegations of voter fraud at the other.

Russian President Vladimir Putin’s administration has made no secret of its desire to prevent Ukraine, long viewed in Moscow as Russia’s "little brother," from drifting Westward. In pursuit of their goals, Russian leaders have played on the vulnerabilities of Ukrainian political leaders. In 2000, for example, President Leonid Kuchma became embroiled in a scandal after the release of a secretly recorded tape on which the president appeared to sanction the assassination of a Ukrainian journalist. Since then, Russia has provided strong political support for Kuchma, helping ensure the president’s political survival. Not surprisingly, Kuchma has steered Ukraine away from NATO and EU integration in recent years.

Yanukovich has also been a central figure in Ukraine’s tilt towards Russia, and the Kremlin reportedly has used its influence to help bankroll his presidential campaign. Some experts believe that, like Kuchma, Russia is exploiting Yanukovich’s troubled past – specifically the fact that Yanukovich served time in jail as a young man for robbery and assault. There is speculation in both Moscow and Kyiv that Russian officials may possess more "compromat," or embarrassing information, on Yanukovich that they could use in the future to coerce him. In Moscow, observers already characterize the potential relationship between Putin and Yanukovich as that of a security services case officer handling an "asset." A Kremlin source indicated that Putin, a former KGB officer, is personally disdainful of Yanukovich’s unsavory past. Nevertheless, the Putin administration badly wants Yanukovich to be elected, as it would likely cement Ukraine in a position of dependency regarding Russia.

Given the high strategic stakes involved, observers in Washington believe Russia is willing to go to great lengths to secure Yanukovich’s election. His victory would free Russia to devote more attention and resources to bolstering its geopolitical interests elsewhere, in particular Central Asia and the Caucasus.

Moscow is especially keen to improve its position in the competition over Caspian Basin energy. Moscow’s primary opponent in this sphere is the United States, which since the September 11 terrorist tragedy has increased its strategic profile throughout the Caspian Basin. [For additional information see the Eurasia Insight archive]. Washington is also the main sponsor of the Baku-Tbilisi-Ceyhan pipeline, an energy conduit that will break a Russia’s virtual monopoly on Western-oriented energy export routes. [For additional information see the Eurasia Insight archive]. Of late, however, China has also entered the energy fray, working with Kazakhstan to establish a pipeline network that would transport energy to the East. [For background see the Eurasia Insight archive].

At present, there are several points in Central Asia and the Caucasus where Russia could apply pressure in an attempt to reorder the geopolitical calculus. Some observers expect Russia to increase pressure on Kazakhstani President Nursultan Nazarbayev, who has aggressively pursued a "multi-vector" policy in recent years that is designed to play Russia, the United States and China off against each other in the energy contest. One way Moscow can attempt to influence Kazakhstani policy is to play the nationality card, stirring up discontent among the large ethnic Russians community in northern Kazakhstan.

Other analysts suggest the Kremlin’s attention may turn to Azerbaijan, a country whose relationship with the United States has appeared to ebb over the past year. [For background see the Eurasia Insight archive]. Reports of infighting within the ruling party in Baku have prompted speculation that President Ilham Aliyev’s authority is shaky. Russia could thus try to repeat the "Kuchma scenario" in Azerbaijan, providing strong political support that helps Aliyev to preserve and consolidate his authority. In return, Moscow would no doubt demand closer Azerbaijani cooperation on energy-related issues, as well as on the ongoing conflict in Chechnya.

Uzbekistan is another country that has experienced recent trouble in its relations with the United States, underscored by the US State Department’s decision last July to sanction Tashkent because of the Uzbek government’s poor human rights record. [For background see the Eurasia Insight archive]. President Islam Karimov of late has signaled a desire to improve relations with Russia, and Moscow seems eager to reciprocate. At an October ceremony marking the admittance of Russia into the Central Asian Cooperation Organization, Karimov championed Russia’s "legitimate" right to play a large role in regional developments. "We here in the region acknowledge, have acknowledged and will continue to acknowledge Russia’s interests - its strategic interests and the historical aims and tasks Russia pursues in this region," Karimov said.

Georgia is another logical focus for Russian officials. However, any designs that Moscow may have on Georgia may be complicated by the continuing political turmoil in the separatist region of Abkhazia. [For background see the Eurasia Insight archive]. Russian officials, without doubt, view Georgian President Mikheil Saakashvili, specifically his desire to reunify the country and push it into the embrace of NATO and the EU, as a threat to Russian interests. However, Russia has traditionally depended on its ability to manipulate Georgia’s separatist regions – Abkhazia and South Ossetia – in order to exert pressure on Tbilisi. The Abkhaz turmoil would appear to deprive Moscow of this lever of influence, at least on a temporary basis.

Given the US preoccupation with the insurgency in Iraq, Washington’s ability to counter Russian moves in Central Asia and the Caucasus would seem limited. In addition to the fact that Iraq is consuming most of the United States’ strategic resources, American officials say their chief aims vis a vis Russia are maintaining its participation in the anti-terror coalition, and keeping access open to Russian energy reserves. These policy priorities, US officials quietly admit, act as a restraint on Washington’s desire to check Russian expansionist impulses in Central Asia and the Caucasus.