- The Washington Times - Monday, January 15, 2001

Russia under President Vladimir Putin is using its gas and oil monopoly to squeeze political concessions out of reticent neighbors, sending shivers as far as Western Europe, where nations rely on Russia for almost half their supply of fuel.

Mr. Putin this month made a two-day trip to Azerbaijan, the latest diplomatic foray in which he used Russia's status as a massive exporter and shipper of oil and natural gas to boost its security and defense objectives.

In recent months, Russia has repeatedly canceled or threatened to cancel contracts for the supply of fuel to energy-dependent neighbors who defy Russian interests. Supplies of natural gas, of which Russia is the world's leading exporter, are particularly vulnerable to abrupt interruptions.

Analysts say the pattern can be seen in Russia's relations with Georgia, Turkmenistan, Moldova, Ukraine and even further afield in markets such as Serbia and Western Europe, which gets 42 percent of its natural gas supplies from Russia.

Moscow is increasingly willing to play the energy card to reclaim its dominance in the Caucasus and Caspian regions, said the Heritage Foundation's Russia analyst, Ariel Cohen. Many of the struggling countries born in the collapse of the Soviet Union remain heavily dependent on Moscow for their energy supplies.

"Russia can limit its supplies in the middle of a cold winter, triggering public unrest and political instability," Mr. Cohen said. "The political and economic dependency of the former Russian provinces is increasing because of Moscow's energy policy."

Gazprom, the huge Russian natural gas monopoly, "is not just a gas company," said Marian Krzaklewski, a leader of Poland's Solidarity party.

"It is a principal source of revenue for the Russian government and a pawn on the political chessboard," he said.

Western Europe has watched developments with increasing alarm. The Financial Times warned in a recent editorial that Moscow risked its reputation as a reliable supplier by its recent actions in Georgia and Ukraine.

"This means treating all its customers properly and, above all, keeping politics out of gas," the paper said.

In Azerbaijan's capital, Baku, Mr. Putin and Azerbaijan President Heidar Aliyev discussed how to divide the vast marine and oil wealth of the Caspian Sea even as Mr. Putin pressed his hosts to increase military ties and help Russia in its fight against rebels in the breakaway republic of Chechnya.

"Military cooperation between Russia and Azerbaijan has been showing signs of progress lately. I think our contacts can be intensified," Mr. Putin told Azerbaijan's parliament in an address.

The summit comes just three months after Russian suppliers unexpectedly shut off a promised shipment of natural gas to Baku, leading to temporary but severe power shortages and public protests.

Russia has pressed its claims on the Caspian basin, second only to the Middle East in terms of proven reserves of oil, even as it has tilted toward Armenia in a bitter territorial dispute with Azerbaijan and pressured Mr. Aliyev not to participate in a U.S.-backed pipeline project that would bypass Russia entirely.

Richard E. Ebel, director of the energy and national security program at the Center for Strategic and International Studies in Washington, said Russia's giant gas and oil companies have legitimate complaints about their customers in neighboring states.

Ukraine, for example, has failed to reform its own energy sector or to make timely payments, even as Ukrainian companies are suspected of siphoning off shipments of Russian natural gas destined for Western European markets.

But, Mr. Ebel said, recent Russian moves to shut off promised supplies to such customers as Ukraine, Georgia and Azerbaijan have been more than simple business decisions.

"There's clearly an implied message here that these countries have to behave themselves, that they shouldn't tie themselves too closely to the West," Mr. Ebel said.

In perhaps the clearest example so far, Russia briefly halted natural gas exports to neighboring Georgia, resulting in temporary power cuts in the freezing capital of Tbilisi.

Georgia is seriously behind in its energy payments, but Moscow is also unhappy about what it says are enclaves of ethnic Chechen rebels being given sanctuary in northeast Georgia.

Moscow also wants to preserve Russian military bases in Georgia dating back to Soviet times, and has been anxious to discourage Georgia from participating in the U.S. pipeline proposal.

Michael Emerson and Sergiu Celac, co-chairmen of a Caucasus task force for the Brussels-based Center for European Policy Studies, called Russia's energy crackdown on Georgia "rough geopolitics" that has "implications for the future of the region and for Russian relations with the European Union and the West."

Ukraine has had particularly prickly relations with Moscow over energy policy. Mr. Cohen said officials in Kiev contend that Russia is using the leverage of its energy wealth to limit Ukraine's ties to the West and increase its economic dependence on Moscow.

Russian Prime Minister Mikhail Kasyanov in November reportedly pressured Ukrainian Prime Minister Victor Yushchenko to have his government assume a $1 billion-plus energy debt incurred by Ukrainian private companies and surrender its interest in the Soviet-era pipeline running through Ukraine to help pay its bills.

Russia's energy clout reaches beyond its immediate neighbors.

While opposing plans for the U.S.-backed pipeline to the Mediterranean, Moscow is proposing to build two major new pipelines through Russia that would serve Western and Central European customers without passing through Ukraine.

Gazprom cut natural gas supplies to Serbia late last month after Belgrade failed to provide payment guarantees, sparking protests throughout Yugoslavia and causing the first serious crisis for the new government of Serbian President Vojislav Kostunica.


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