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|  | JANUARY 24, 2006
By Jason Bush Exploding Pipelines, Damaged CredibilityDid Russia blow up its own gas pipelines to punish West-leaning Georgia? That's a long shot, mainly because Moscow has more to lose on the world stageNothing could be bigger news for this former Soviet republic: "An act of sabotage against the Georgian energy system" and "an attempt to force Georgia to its knees," fumed Georgia's President Mikhail Saakashvili, hours after unknown attackers blew up two gas pipelines and an electricity cable carrying vital energy supplies from Russia to Georgia on Sunday, Jan. 22. Saakashvili and other senior Georgian officials hinted that the Russians themselves were behind the explosions, which have deprived the small Caucasian country of heat and power in the midst of one of the coldest winters in decades. The Russians haven't minced words either: The Georgian leader was suffering from "hysteria... parasitic smugness, hypocrisy, and unruliness," according to the not-so-diplomatic language of the Russian Foreign Ministry. The incident comes just three weeks after Russia embargoed gas supplies to Ukraine, disrupting supplies to Western Europe and causing widespread international angst about Russia's reliability as an energy supplier. That spat was patched up in days. But, embarrassingly for Russia, Western customers have reported further shortfalls in supplies in the weeks that followed, as the harsh winter put Russia's domestic energy system under unprecedented strain. ALTERNATIVE ENERGY. Now Middle East gas from Qatar, Egypt, and elsewhere is being promoted as a hedge against cuts from Russia. The outages are also boosting the argument for nuclear energy -- notably in Britain, where Tony Blair's government is seriously considering the option of building new nuclear plants -- and for more coal-fired power generation. "The conventional wisdom that energy [from Russia] could be depoliticized has been upended," says Paul Horsnell, an energy analyst at Barclays Capital in London. For all the anguish caused by Russia's aggressive energy policies, it's a first for anyone to accuse it of actually blowing up its own pipelines to spite its neighbors. No one denies that the pipelines to Georgia were deliberately sabotaged. Russia has blamed terrorists, possibly Islamic militants operating in the region. Yet the Georgians blamed the Russians. "We've received numerous threats by Russian politicians and officials at different levels to punish us for basically not giving them pipelines," Saakashvili told the BBC. STRAINED RELATIONS. Could the Georgian accusations possibly be true? The incident's timing is certainly a remarkable coincidence. It comes at a time when Russia is playing hardball with Georgia, as it is with other countries in the region, concerning the terms of gas deliveries. The goal of Russian "gas diplomacy" is crystal clear: to gain full or partial control over the export pipelines, which take Russia's gas to lucrative export markets. Countries that comply, such as Belarus, have been offered continued favorable gas prices. Those that reject Russia's demands, such as Ukraine and Georgia, face steep price rises. A further complicating factor is the strained political relationship between Russia and Georgia -- a country that, like Ukraine, has opted for a strongly pro-Western foreign policy, since its 2003 "Rose" Revolution swept pro-Western politician Mikhail Saakashvili to power. Cutting off energy supplies in the middle of winter would certainly be one way to punish Russia's ungrateful former satellites for their disloyalty. And if Russia's security services were indeed involved in some sort of skulduggery directed against Georgia, it wouldn't be the first time they have been accused of dirty tricks. "NAIVE" REACTION. Still, there are good reasons to take the conspiracy theories with a large dose of skepticism. Blowing up the pipelines has hurt not only Georgia, a country that has prickly relations with Russia, but also Armenia, a traditional Russian ally. What's more, Russia's national gas company Gazprom has been making efforts to fill the shortfall in supplies to Georgia by pumping more through neighboring Azerbaijan, helping to ease tensions. Last but not least, it's highly doubtful that members of Russia's leadership or security services seriously believe that such an extraordinary provocation would be in Russia's own national interest. At a time when Moscow is still trying hard to convince its skeptical international partners that it's a reliable energy supplier, yet another upset to gas exports is probably the last thing Russia needs right now. "What happened is a huge blow to the authority of Russia. And to [President Vladimir] Putin, who positions Russia as some kind of energy superpower with huge significance for the whole world," says Alexei Malashenko, a Caucasus analyst at the Carnegie Moscow Centre think tank. "The Georgian reaction is naive, because this has done far more damage to Russia than to Georgia." SAFE SUPPLIES? A more likely explanation, he says, is that the bombings were carried out by local militants opposed to Russian rule. Over recent months, violence -- once associated mainly with separatist guerrillas in Chechnya -- has become increasingly common across the whole of the volatile North Caucasus region. Still, coming so soon after the Russian-Ukrainian imbroglio, the latest row is another reminder that politics in the former Soviet Union often seems to border on the surreal. And whether the attacks were the work of Russian spooks, or simply terrorists, they're hardly a reassuring message for Moscow's international partners worried about secure energy supplies.  Bush is BusinessWeek's Moscow correspondent Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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