IN THIS ISSUE

* Baku considers non-Turkish routes for gas exports
* Nuclear deal in Vienna may change Moscow’s Iranian policy
* Terrorist attacks reported in Ingushetia and Chechnya
* Bakiyev loyalists form new Kyrgyz government
* E.U. and U.S. request swift ratification of Turkish-Armenian protocols
** New in the Jamestown blog on Russia and Eurasia (http://www.jamestown.org/blog):
- In Ukraine: to Sign or Not to Sign? That is the Question

Azerbaijan can Resort to Multiple Options for its Gas Exports

Vladimir Socor

Countries and companies along the Nabucco route in Europe (Bulgaria, Romania, Hungary, Austria, Germany) as well as Greece, Italy, and Switzerland are all expressing interest in purchasing Azerbaijani gas. If Turkey continues to block the transit agreement and if the E.U. and the U.S. fail to pull their weight with the AKP government, Azerbaijan can resort to alternative solutions for its gas exports.

Baku is now actively considering other markets and pipeline options. On October 14 Azerbaijan’s State Oil Company signed an agreement with Gazprom for an initial volume of 500 million cubic meters in annual deliveries to Russia, starting on January 1, 2010. The small volume is susceptible to further increases at any time, without upper limits other than those of Azerbaijan’s own gas surplus. The Russian purchase price is apparently equivalent to European netback prices. Moreover, this agreement apparently precludes the re-export of Azerbaijani gas by Gazprom to third countries at Azerbaijan’s expense (EDM, October 15).

Baku is also considering the possibility of starting gas exports to Iran, initially in small volumes, by early 2010. Iran is already importing Turkmen gas for consumption in Iran’s northern provinces. Those volumes, however, do not fully meet requirements there. Iran intends to import additional volumes of gas for off-season storage and peak-season consumption. This creates a market for Azerbaijani gas in northern Iran (Trend, October 17).

No third country transit solutions are necessary for Azerbaijani gas to reach Russia or Iran. Nor is the construction of new pipelines necessary. Pipeline connections to Russia and to Iran existing since the Soviet era, now require modernization of lines and compressors. Pipelines in both of these directions add up to approximately 10 billion cubic meters (bcm) in annual capacities. These can accommodate Azerbaijan’s annual export surpluses for the next few years, in the event that the Nabucco project falters, or if Turkey’s AKP government remains uncooperative on pricing and transit terms for Azerbaijani gas.

Azerbaijan plans to upgrade the Baku-Novo Filya and Gazimahomed-Mozdok pipelines for gas exports to Russia’s North Caucasus territories. These Soviet-era pipelines can easily be adapted for use in the reverse-mode. Their combined capacity (after upgrading) would enable Azerbaijan’s State Oil Company to deliver up to 7 bcm of gas to Russia annually, according to the company’s president Rovnag Abdullayev (APA, October 19).

Similarly, Azerbaijan plans to upgrade the Gazakh-Astara and Gazimahomed-Astara gas pipeline links to Iran. Pending this, Iran’s gas storage authority is expressing interest in using gas storage sites on Azerbaijan’s side of the common border, with a view to using those gas volumes during winter in northern Iran (Trend, October 17, 19).

During the October 16 session of Azerbaijan’s government (EDM, October 21), President Ilham Aliyev clearly alluded to the proposed White Stream pipeline as a possible option for Azerbaijan’s gas exports (www.day.az, October 17). White Stream is being proposed by a London-based project company to carry Azerbaijani and Turkmen gas via Georgia and the seabed of the Black Sea to Romania and onward into E.U. territory (an earlier, now-discarded version would have run on the seabed to Ukraine). White Stream is one element in the E.U.’s Southern Corridor concept, designed to increase capacity and security of transportation for Caspian gas to Europe.

Aliyev discussed the White Stream proposal for the first time with the Romanian President Traian Basescu in late September in Bucharest, where the two presidents signed a strategic partnership agreement. In parallel, Azerbaijan’s State Oil Company intends to examine the option of gas liquefaction for export via the Black Sea to E.U. territory. According to company president Abdullayev, “we are ready to review these forward-looking proposals in detail” (APA, October 20). Consideration of the Black Sea options suggests that Turkey does not necessarily enjoy a monopoly on gas transportation from the Caspian basin to Europe; and that Turkey can ultimately be circumvented, if the AKP government overplays its hand.

The AKP government’s gas conflict with Azerbaijan is two years older than the Turkish-Armenian political normalization, which is now taking its first, uncertain steps. The two processes have no relationship to each other and Baku insists on keeping them separate. Meanwhile, Ankara’s price extortion and its delaying tactics on the transit agreement have hurt Azerbaijan financially in two ways: by cutting into Azerbaijan’s annual export revenues and by slowing down the development of Azerbaijan’s Shah Deniz field, the main designated source for the Nabucco pipeline.

Baku’s October 16 response and its follow-up measures seek to concentrate attention in Brussels and Washington to a festering situation that puts Nabucco and the Southern Corridor at risk. According to Aliyev, at the government session, Ankara’s “unacceptable terms proposed to us may lead to a failure of this entire project” (www.day.az, October 16). While Azerbaijan is irreplaceable as a producer as well as a transit country, Turkey is not irreplaceable.

Tehran on the Brink of Procuring S-300 Missiles

Pavel Felgenhauer

The Russian-Iranian deal on advanced S-300 long-range anti-aircraft missiles may go ahead despite U.S. and Israeli objections. This week the Interfax news agency quoted an unnamed government source confirming that the deal to sell Iran S-300 missiles had been “frozen” for several years, but Russia will not unilaterally legally invalidate it. According to the source, since the S-300 contract was “frozen,” Russia has not received any advance payments from Iran. The S-300 deal may or may not go ahead in the future, “depending on different political circumstances, since it is now more than simply a commercial contract” (Interfax, October 21).

According to Interfax, if Moscow decides to proceed, the missiles could be shipped to Iran immediately: they have been fully prepared, stockpiled, and ready for shipment in the defense ministry arsenals. The Interfax source directly connected the S-300 deal to the talks in Vienna on the Iran nuclear issue. Unnamed sources “close to Russia’s arms traders and arms producers” are quoted by Interfax as suggesting that: “If Russia does not fulfill its obligation to sell Iran S-300’s, this may undermine Russia’s reputation on the international arms trade market” (Interfax, October 21).

Since 1991, Russia has been a major supplier of modern arms to Iran, including MiG-29 jet fighters and Su-24 jet bombers, thousands of T-72 tanks, Kilo-class submarines, S-200 and Tor M1 anti-aircraft missiles. In 1995, a secret memorandum was signed by U.S. Vice President Al Gore and the Russian Prime Minister Victor Chernomyrdin to stop Moscow from selling arms to Iran in exchange for allowing commercial launches by Russian space rockets of foreign communication satellites containing U.S. technology.

In 2000, then President Vladimir Putin repudiated the Gore-Chernomyrdin memorandum and Moscow resumed signing arms contracts with Tehran. In December 2005, Moscow sold Iran 29 modern short-range Tor M1 anti-aircraft missile launchers with radars for $700 million. The Tor M1 missiles have a range of 12 kilometers (km) and can hit targets 6 km high. Reportedly, in the same year, a contract was signed to sell Iran S-300 missiles. The contract to sell S-300’s is reported to involve “five divisions of S-300 PMU1 anti-aircraft complexes” –40 to 60 anti-aircraft missile launchers each carrying four missile tubes, radars and control stations, with a combined value of $800 million. The S-300 PMU1 has a range of 150 km and can hit targets up to 27 km high (Kommersant, February 17).

The S-300 missiles earmarked for Iran are not newly built, but instead they are drawn from the Russian defense ministry inventory. The S-300 deal is highly profitable and arms traders want the deal with Iran to go through. The political decision to “freeze” the deal was taken by Putin and before he decides otherwise, it remains on hold. Tehran has pressed Moscow hard to deliver the S-300’s. In December 2008 the Iranian state news agency IRNA reported that after several years of negotiations to buy S-300’s Iran and Russia had finalized a deal, and that Tehran would take “delivery of the S-300 air defense system from Russia soon.” Tehran dismissed Israeli objections on the sale of S-300’s, announcing that, “Israelis are not able to damage Iranian-Russian friendly relations” (IRNA, December 21, 2008). However, Russian officials repudiated the statement and Iran is still awaiting a positive decision (Interfax, October 21). Now the waiting could be over.

Moscow has indicated its displeasure with Iranian intransigence over its nuclear program. But this week it was reported from Vienna that a draft agreement has been drawn up by the International Atomic Energy Agency (IAEA) between Iran the U.S., Russia and France to ship to Russia 1,200 kilograms of the 3.5 percent low-enriched uranium that Iran has produced (about 75 percent of its stockpile). There the uranium will be further enriched to 19.75 percent and sent to France to make fuel rods for a U.S.-built research reactor in Tehran that is used to produce radioisotopes for scientific and medical purposes (ITAR-TASS, October 21). This deal was hailed in the West as a sign of Iranian flexibility, since it seems to significantly reduce the amount of Iranian enriched uranium and lowers the immediate prospect of Tehran making a nuclear bomb (Reuters, October 21). However, this apparent breakthrough may come at a grave price if in exchange for its “flexibility” Iran finally gets the S-300’s from Moscow. Washington is currently praising Tehran for finally responding to Barack Obama’s outstretched hand and will not be in a strong position to do or say much if Moscow rewards Tehran with S-300’s.

Together with the Tor M1 and the older super long-range S-200 (provided by Russia in 1994) and the S-300 missiles Iran could build a solid multilayer anti-aircraft defense shield that could defend its nuclear facilities against a possible U.S. or Israeli air attack and inflict serious damage on any attacking force. Without the S-300’s Iran does not have any credible air defenses and its nuclear facilities are vulnerable to such attacks (Interfax, October 21). The possible price for showing “flexibility” to get the S-300’s by sending 1.2 tons of low-enriched uranium abroad may not be as significant as it seems. In 2008, Russia shipped to Iran some 82 tons of low-enriched uranium as nuclear fuel for the Bushehr nuclear power reactor and it is stored under the protection of an IAEA seal (RIA-Novosti, February 25). Iran could dip into that source to easily replace the uranium it may agree to send to Russia under the IAEA draft deal as soon as its nuclear facilities are protected by a credible air defense system from a devastating outside attack. The over-enthusiastic Obama administration might face a nasty surprise.

Kadyrov Again Declares Victory as Rebel Attacks Continue

The Jamestown Foundation

Several terrorist attacks have been carried out in Ingushetia and Chechnya this week. Today (October 22), a bomb exploded as Isa Korigov, the head of the criminal police in the Ingush city of Malgobek, was getting into his car with his wife at their home in the city of Malgobek. The blast injured Korigov and his wife, and killed their driver, Maksharip Dzeitov. Korigov’s injuries were described as moderate, while those of his wife were described as severe. According to preliminary findings, the blast had the force of three kilograms of TNT. The attack was not the first on Korigov; in July 2008, unidentified gunmen fired a grenade launcher at his house. No one was hurt in that attack, but when the police arrived at the scene of that incident, the attackers detonated a bomb that wounded Korigov and three other policemen, all of whom were hospitalized (www.newsru.com, October 22).

Yesterday (October 21), a roadside bomb was detonated as a police vehicle was traveling to the scene of an attack near the village of Yandare in Ingushetia’s Nazran district. A source in Ingushetia’s law enforcement bodies told Interfax that according to preliminary information, an undetermined number of people were killed and wounded in the blast. However, a source in Ingushetia’s interior ministry later said that no one was killed in the blast. The bombing took place after unidentified attackers fired grenade launchers and automatic weapons at a traffic police post near Yandare, wounding two traffic police officers and two OMON police commandos. The attackers had apparently prepared a roadside bomb knowing that police reinforcements would be called to the scene of the attack on the traffic police post (www.newsru.com, October 21).

On October 20, unknown attackers fired on a car being driven by a member of the Nazran police department, Timur Tungoev. According to the press service of Ingushetia’s interior ministry, the police officer was not hurt in the attack and fired back at the attackers (www.kavkaz-uzel.ru, October 20). That same day, police found an arms cache near an agricultural mill in the village of Barsuki in Ingushetia’s Nazran district. The cache included seven grenades for a grenade launcher, two hand grenades and a small amount of ammunition (www.kavkaz-uzel.ru, October 20).

On October 19, bomb disposal experts defused a car bomb near a bus stop in the city of Nazran near the building housing the main staff of Ingushetia’s interior ministry. After clearing the area, they detonated the car bomb in a controlled explosion that reportedly could be heard outside the city. According to investigators, the force of the explosion was the equivalent of five to ten kilograms of TNT (www.newsru.com, October 19).

Also on October 19, a local resident of Nazran’s Plievo village was shot to death in his car by unknown attackers. The victim was identified only by his last name, Azhigov (www.kavkaz-uzel.ru, October 19).

Meanwhile, four policemen and a passerby were injured in neighboring Chechnya yesterday (October 21) when a suicide bomber detonated a bomb in the Oktyabrsky district of the capital Grozny. Chechen Interior Minister Ruslan Alkhanov told Interfax that the incident took place when police tried to detain the bomber, whom he identified as Zaurbek Khashumov, who was born in 1992 and was on the list of those in the republic who had supposedly disappeared without a trace. According to the Kavkazsky Uzel website, the incident marked the ninth suicide bombing in Chechnya since the federal authorities announced an end to anti-terrorist operations in the republic last April (www.kavkaz-uzel.ru, October 21).

Also on October 21, one policeman was killed and two wounded during a counter-insurgency operation in Chechnya’s Urus-Martan district, in which two militants were also killed. The operation was launched in the village of Goiti after police blockaded a group of rebels in several homes. That same day, Chechen Interior Minister Alkhanov said that a 20-year-old militant, Aslanbek Khachukaev, had been killed by security forces on the outskirts of the village of Yermolovka in Chechnya’s Grozny agricultural district. According to Alkhanov, Khachukaev was involved in the murder last month of the head of the administration of the village of Stary Achkhoi, Ali Atramov, and his son (www.sknews.ru, October 21).

Meanwhile, two Russian servicemen were wounded when gunmen fired grenade launchers and assault rifles at two vehicles outside the village of Khatuni in Chechnya’s southern Vedeno district. A Chechen law enforcement source said that the attackers fired on a Ural truck and an armored tractor ferrying Russian servicemen to cut down trees. The two injured soldiers were contract servicemen –a sergeant and a private (ITAR-TASS, October 21).

On October 19 the Deputy Prosecutor-General Ivan Sydoruk told the Legal and Court Affairs Committee of the Federation Council, the Russian parliament’s upper chamber, that Chechnya, Dagestan and Ingushetia are “the biggest problems in southern Russia” and that the rate of attacks on law enforcement personnel in the North Caucasus is growing steadily. He said that 192 people, including policemen, were killed, 484 were wounded and 425 extremist crimes were perpetrated in the three republics in the first nine months of the year. Sydoruk added that militants are propagandizing the “extremely aggressive” religious tendency of “Wahhabism” and are “ideologically preparing” suicide bombers (Interfax, October 19).

Chechen President Ramzan Kadyrov declared on October 17 that the fight against the republic’s rebels is approaching a victorious end, telling top law enforcement officials that it is necessary to start dealing with “small problems,” including collecting intelligence on the militants in order to “act preventively” to “foil their plans at their planning stage.” Kadyrov also said that the search for Chechen rebel leader Dokka Umarov, the head of the self-declared Caucasus Emirate, and two other rebel leaders, Muslim and Khusein Gakaev, must continue. “They must be destroyed,” he said. “They themselves have signed their [death] sentences. We have studied each square meter of the woods; we are looking for them everywhere. And I am convinced that they have not got long left to run in the forest,” Kadyrov claimed (www.newsru.com, October 17).

Bakiyev Reshapes the Kyrgyz Government to Suit his Interests

Erica Marat

The resignation of the Kyrgyz Prime Minister Igor Chudinov on October 19 and, consequently the entire government should not be confused with any attempt to reform the country’s political system. President Kurmanbek Bakiyev has indeed promised to change the way Kyrgyzstan’s government functions in order to eliminate corruption and promote more efficient decision-making. Nonetheless, recent changes indicate his wish to maximize his power over the government. The collective resignation was masterminded beforehand, with members of parliament ordered to support the new Prime Minister Daniyar Usenov, who had previously served as the chief of the presidential staff.

Bakiyev wants to reduce the number of ministries and government committees. He explains this as a necessity aimed at increasing governmental efficiency and purging incompetent officials (www.24.kg, October 21). But judging from Usenov’s appointment, this will represent a mere cadre reshuffle. The maneuver will further centralize the president’s control, who has shown that he is the only one able to sack and appoint government officials.

Usenov promised to consider opposition leaders to fill government positions (www.akipress.kg, October 21). Although the new prime minister is trying to show his willingness to collaborate with the opposition, this will only mean that both the opposition and the regime have found a basis for cooperation despite their political differences. The reshuffle allows both the president and his allies to benefit politically and financially from redistributing government posts, while the opposition leaders continue functioning as political and business actors. In short, whoever is allowed to enter the government from the opposition camp will likely have business interests coinciding with his or her political ambition. The situation may allow the most ardent opponents of Bakiyev and even contenders in the presidential election on July 23 to obtain important government posts.

Indeed, for Kyrgyz opposition leaders it is important to be part of the larger political process, especially since most are pressured by the government. Since Bakiyev came to power an unexpected number of politicians and journalists have either been killed or threatened with being violently removed. To survive in such conditions one must be either willing to compromise on personal political views and join the regime or escape Kyrgyzstan altogether. Indeed, the number of Kyrgyz political dissidents has grown in recent years.

Interestingly, however, the views of local politicians are remarkably fluid. Some former political dissidents are willing to return home and try their luck once again with the new government. Yesterday’s anti-government activists abroad are now eager to become the key promoters of Bakiyev’s regime. “To me this all is just very confusing,” one Kyrgyz dissident told Jamestown regarding his former friends who now want to return to Kyrgyz politics. For all the supporters of the Bakiyev regime residing in Kyrgyzstan or abroad, it became convenient to argue that he is actually pursuing genuine political reform and not exercising political authoritarianism. “Maybe we underestimated the influence of the Russian and Kazakhstani political systems on Kyrgyzstan. As long as the government controls the media and is able to support political rent-seekers –authoritarianism encounters little objection,” one Kyrgyz scholar explained to Jamestown.

In the political environment that Bakiyev has created in Kyrgyzstan, it is very easy for the president to dissolve the parliament and government whenever he chooses (www.parus.kg, October 21). Bakiyev’s more direct control of the security and military structures promoted by his “reforms” will further allow the president to stamp out any political dissent. Meanwhile, like its display of immediate support towards Usenov, the parliament will back any directive from the president. Former Prime Minister Chudinov is likely to earn another high-level post within the government or private sector.

Usenov is among the most well known and successful entrepreneurs and politicians in Kyrgyzstan. He occupied various posts since the early 1990’s. His political impunity allegedly helped him to promote his business interests. During the early 2000’s he was pressured by the former president Askar Akayev’s regime, but his political and entrepreneurial activity has gathered momentum under Bakiyev since 2005. He has also occupied the posts of deputy prime minister and Mayor of Bishkek (www.centrasia.ru, October 21). According to Kyrgyz observers, Usenov might have been the mastermind behind Bakiyev’s bargaining with the United States on the status of the U.S. Manas airbase earlier this year. Thanks to its geopolitical maneuvering from February to July this year, the Kyrgyz government was able to increase U.S. rent for the base and obtain 25 percent of Russia’s $2 billion credit.

E.U. Comments on Ankara’s Policy in the South Caucasus

Emrullah Uslu 

The European Commission has released its “2009 Progress Report” and “Enlargement Strategy Paper” in which it assessed developments in Turkey. The strategy paper stressed Ankara’s role in contributing to the stability of the Middle East and the South Caucasus. Turkey’s efforts toward the normalization of its ties with Armenia and its key position on the Nabucco project, which will ease the E.U.’s energy dependence on Russia, was also discussed in the strategy paper (Anadolu Ajansi, October 14).

The Enlargement Strategy Paper stressed that the accession negotiations with Turkey have reached a more critical stage, requiring a new impetus for implementing reform. The paper notes that the pace of Turkish reform is often too slow. Furthermore, “the international economic crisis adds to the strain. In several cases, bilateral questions unduly affect the accession process” (E.U. Enlargement Strategy Paper, October 14). As an obstacle to the E.U. enlargement strategy, the report reiterated that Turkey continues to face major challenges relating to the rule of law, in particular the fight against corruption and organized crime. These issues are important in a functioning democracy and economy and largely shape the E.U. accession process (E.U. Enlargement Strategy Paper, October 14).

It also emphasized several issues that Turkey has taken major steps toward fulfilling in terms of its E.U. membership requirements. Turkey is making progress in resolving border disputes, in conformity with the principle of the peaceful settlement of such disputes in accordance with the United Nations Charter, including, if necessary, the jurisdiction of the International Court of Justice. The report noted that, “Turkey is committed to cooperation in the region and is part of the Black Sea Synergy framework. The Commission supports Turkey’s participation in the Black Sea basin cooperation program under the European Neighborhood and Partnership Instrument (ENPI) (E.U. Enlargement Strategy Paper, October 14). Regarding Ankara’s steps toward establishing diplomatic relations with Armenia, the report highlighted that, “significant diplomatic efforts to normalize relations with Armenia were made, resulting in the signature of protocols for the normalization of relations in October 2009. It is important that these protocols are swiftly ratified by both countries” (E.U. Enlargement Strategy Paper, October 14).

In addition to other important points contained in the strategy report, it appears that the E.U.’s insistence on the swift ratification of the protocols might prove problematic for the Turkish government. Despite the fact that Ankara has consistently emphasized that the protocols will not be ratified until Armenian troops withdraw from Karabakh, the Turkish public and the Azerbaijani government are anxious about the prospect of international pressure on Ankara to ratify the protocols before such a solution is found (EDM, October 14).

The Turkish Foreign Minister Ahmet Davutoglu, during a recent parliamentary address, repeated that the Turkish government has not changed its political commitment to ending the Armenian occupation of Karabakh. “Azerbaijan’s territorial integrity is as important for Turkey as its own. Turkey will continue to advocate [Azerbaijan’s rights] at every diplomatic stage, like it has done over the past 17 years” Davutolgu said (Hurriyet Daily News, October 21).

It seems that it is also in the interests of the E.U. to find a solution to the Karabakh issue. In its “European Neighborhood and Partnership Instrument Azerbaijan Country Strategy Paper 2007-2013,” the European Commission stated that it also aims at stabilizing the whole South Caucasus region by supporting a peaceful settlement of the Karabakh conflict. Should a deal be reached and implemented, several basic assumptions in the strategy might change quite radically and, consequently, the commission’s approach to assistance should be updated (European Neighborhood and Partnership Instrument Azerbaijan Country Strategy Paper 2007-2013).

In its first official report after the Turkish-Armenian protocols were signed on October 10, the E.U. has expressed its expectation to see the protocols between Turkey and Armenia quickly ratified by both countries. Perhaps from the perspective of the E.U. it is strategically important to encourage greater stability in the energy basin of the South Caucasus and to maintain the security of its energy routes. Yet, both the E.U. and Turkey need to predict how Russia as an influential actor will develop its policy toward Azeri-Armenian relations. Recently, Azerbaijan’s President Ilham Aliyev has taken initiatives that imply Baku might be leaning toward Moscow, but it is unclear as to whether Aliyev is bluffing both Turkey and the E.U. in order to ensure their support over Karabakh.

To solve the remaining problems with Azerbaijan, Davutolgu is visiting Baku, however it remains to be seen how the E.U.’s demand to ratify the recently signed protocols will influence Turkish-Azeri relations.

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