Wednesday, 29 November 2006

GEORGIA PLANS FOR ALTERNATE GAS SUPPLIES TO ESCAPE GAZPROM’S PRICE HIKE

Published in Field Reports

By Kakha Jibladze (11/29/2006 issue of the CACI Analyst)

According to Georgian president Mikheil Saakashvili, Gazprom’s demands are the equivalent of economic blackmail against the country as it doggedly follows its pro-Western orientation. During a speech on November 23, the president sought to encourage Georgians to stay united in their fight against Russia’s influence despite the threat of more hardships this winter.

“Those who want to make Georgia kneel down will soon understand that they will fail and we will get stronger.

According to Georgian president Mikheil Saakashvili, Gazprom’s demands are the equivalent of economic blackmail against the country as it doggedly follows its pro-Western orientation. During a speech on November 23, the president sought to encourage Georgians to stay united in their fight against Russia’s influence despite the threat of more hardships this winter.

“Those who want to make Georgia kneel down will soon understand that they will fail and we will get stronger. This [pressure on Georgia] is even better for us because we will make our economy more flexible and stronger,” he told crowds at Freedom Square on the third anniversary of the Rose Revolution. “But of course we are on the beginning of this road and we need patience and unity… Today Georgia knows the price of freedom. Good will always prevail over evil. Today Georgia is building a modern European state.”

The fact that the battle over gas prices was expected does not make it less fierce. In a move calculated to bypass the bulk of Georgia’s previous demand from Russia – last year Gazprom supplied all of Georgia’s natural gas – the government has engaged in a frenzy of negotiations with neighboring countries. According to media reports, the government is nearing an agreement with Azerbaijan and Turkey to receive more than the amount of gas originally agreed upon from the Baku- Tbilisi-Erzurum pipeline which is supposed to start pumping gas by the end of this year.

In addition, Georgia has sought Iranian support. Iran helped the country survive the gas crisis last year after two mysterious explosions in Russia caused the country to first lose its gas supplies and then its electricity. The potential deal with Iran is a touchy one, due to Georgia’s strong alliance with Washington. However according to Matthew Bryza, the U.S. Deputy Assistant Secretary of State for European and Eurasian Affairs, the United States understands that Georgia is in “a difficult position” now that the Russian gas company has doubled its price and Washington does not “want Georgia or Armenia or any other country to be in a situation where it does not have energy for the winter,” he said at a press briefing in Tbilisi on November 17.

However the Georgian newspaper Kviris Palitra published an interview with the U.S. Ambassador to Georgia, John Tefft, which cast doubt on American understanding.

According to the interview, the ambassador said that Bryza did not mean Washington is prepared to turn a blind eye on any long-term relationship between Tbilisi and Tehran.

While the Georgian government is putting on a brave front, there is little chance the country can make it through the winter without any gas supplies from Russia. According to a report published on the news website EurasiaNet, the government has not completely closed the door on Gazprom; it is just not heading up the negotiations – private gas distribution companies are.

The new, higher gas prices – just like the embargo on wine and mineral water, and the transportation blockade – will be a bitter pill to swallow at first. However if the government truly finds new partners for providing natural gas, this winter will be one more irreversible step toward Georgia’s independence from Moscow’s influence.

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The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

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