By utilizing utilities, Russia retains power

TBILISI, Georgia — Several miles from the stately palace where the czar’s envoy once governed Georgia is a nondescript office building in a grimy industrial district.

Drab it may be, but for some Georgians, it symbolizes new Russian power in their country, a land that spent nearly two centuries under Moscow’s rule before becoming independent with the collapse of the Soviet Union in 1991.

The building is the headquarters of Telasi, a Russian-owned company that provides this city of 1.3 million people with electricity — a precious commodity in a country where blackouts are a part of daily life.

It’s just one of the tendrils of Russian economic influence that reach across Georgia and the rest of the former Soviet Union.

Using pipelines and power lines instead of tanks and troops, President Vladimir Putin’s Russia is seeking to strengthen its influence over former Soviet republics at a time when the United States and European Union are extending their presence eastward to places that until recently were Moscow’s domain.

That change is highlighted by the entry of the three formerly Soviet Baltic states into NATO and the European Union.

“Russia did not want, does not want and never will want to lose its influence in the post-Soviet space,” said Ramaz Sakvarelidze, a political analyst in Georgia, where Moscow has promised to close two Soviet-era military bases.

“And now that its economy has not only gotten on its feet, but is able to act outside its borders, Russia is replacing its military levers of influence with economic structures.”

Telasi is a case in point, he said.

Russia’s state electricity monopoly, Unified Energy Systems (UES), bought a controlling stake in the Tbilisi utility last year from the U.S. power company AES.

Georgian politicians protested the deal would give Russia a powerful political lever over their country. Russia already controlled nearly all natural-gas supplies to Georgia, where steam heating delivered to entire city neighborhoods is only a memory and many people rely on gas-fired heaters to warm homes in winter.

Georgia hopes a U.S.-supported natural-gas pipeline from the Caspian Sea to Turkey will ease its dependence on Russia, but it’s not expected to be built before 2006.

UES chief Anatoly Chubais flew to Georgia last August and sought to reassure authorities over the Telasi purchase, saying the company had no political goals and Georgia’s electricity supplies would be secure.

But critics questioned the company’s motives for buying a utility whose chances of making a profit are diminished by decrepit equipment, corruption, poverty and what U.S. Ambassador Richard Miles called “an innate dislike on the part of Georgians to pay for energy.”

Mr. Miles said the American company decided to sell because it couldn’t afford “the hemorrhaging of money.” But he said the issue of why UES bought Telasi was “a good question.”

Story Continues →