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Russia Intelligence N°40 - January 15 2009 Published every two weeks / International Edition CONTENTS GEORGIA P. 1 GEORGIA c What form of strategic part- c What form of strategic partnership with nership with the United States? the United States? P. 2 KAZAKHSTAN c A contrasting economic One of the last official acts of the US State Department has been the “Strategic Partnership and industrial landscape Charter” with Georgia signed in Washington on January 9 by Condoleezza Rice and the new IRAN Georgian foreign affairs minister, Grigol Vashadze who was appointed last December. The c The supreme leader in sup- agreement was spoken of by Mikheil Saakashvili as a founding act implying the end of Russ- port of Ahmadinejad ian influence in Georgia. But its true importance is not easy to make out. The charter reaf- ALERT firms US support for Georgia’s integration into “Euro-Atlantic institutions” and its backing for c Inter Rao to jointly manage Tbilisi’s bid to join NATO. It makes a barely veiled reference to continuing military coopera- Inguri power plant tion between Georgia and the United States as part of the fight against “global threats”. P. 3 SOUTH OSSETIA c Trouble brewing between During the short signing ceremony at the State Department, Condoleezza Rice stressed that the Kremlin and “President” the United States “supports and will always support Georgia’s sovereignty and territorial Eduard Kokoyty integrity”, and will do everything to keep the spirit of the “Rose Revolution” alive. Concern- BEHIND THE SCENE ing NATO membership, Condie Rice stressed that this depended on “the desires of the Geor- gians themselves and their ability to meet NATO standards”. Grigol Vashadze was a bit more c Kyrgyzstan: US base loses out against Russian loan grandiloquent, calling it a “historic day” and describing the agreement as the “stepping stone that will bring Georgia to Euro-Atlantic structures, to membership within NATO, and a return to the family of western, civilized nations”. READ ALSO… It is understandable that the Georgian authorities consider the charter of such importance. RUSSIA INTELLIGENCE It symbolizes the fact that Georgia now has only one serious ally in the West – the United States www.russia-intelligence.fr – and that Saakashvili is counting on Washington to prevent the question of Georgia’s territo- rial integrity from disappearing off the agenda in international meetings on security in Europe THE GAS CRISIS and on relations between Europe, the United States and Russia. c Who will pay for the damage in Moscow and Kiev? On Washington’s side things are less clear. Support for Georgia has been a consistent fea- PROFILE c Alexandre Medvedev, ture of the Bush administration’s policy in the region even though Washington’s reaction to the Gazprom’s Viceroy war that took place in South Ossetia this summer was rather restrained. Be that as it may, ENERGY Washington think tanks, which play such an important role in defining the Administration’s c OPEG: When the mountain foreign policy, do not all support Mikheil Saakashvili. Close ties have been established in re- gives birth to a mouse cent months between these institutes and some of Saakashvili’s political opponents, such as DEFENSE Nino Burdzhanadze, the former speaker of parliament and now his political rival. Barack c MiG: Mikhail Pogosyan takes Obama’s attitude towards Georgia will of course depend on the type of relationship that will all be established between Washington and Moscow. The odds are that there will be a period of observation during which many elements will come into play, such as how the situation in Gaza UKRAINE INTELLIGENCE evolves, the approach to take in dealing with Iran and the role that Russia might play with re- www.ukraine-intelligence.fr spect to Tehran. ELECTIONS c Viktor Yanukovich bides his Finally, the tragicomedy that Moscow and Kiev have been playing in recent days concern- time ing the supply of Russian gas to Europe will leave a deep mark on the central and eastern Eu- ropean countries that suffered the most during this crisis. The question of securing Russian SUBSCRIPTION gas deliveries to Europe will inevitably come back up for discussion. Moscow will try to make Electronic Edition significant progress on the North European Gas Pipeline project. But the recent events will (PDF, published every two weeks, consolidate the views of supporters of alternative routes that do not go through Russian terri- 23 issues per year) tory, such as the Nabucco project, for example. Regarding this matter, Georgia’s role is not of SPECIAL OFFER minor importance, as its territory offers a natural shelter for energy corridors linking Central Discount 15 % Asia, the Caspian region and Europe. The stakes of a strategic partnership between Georgia € 600 and the United States are therefore real, but Moscow’s role in this discussion must not be un- €510 per year derestimated. d A EURASIAN INTELLIGENCE PUBLICATION CENTRAL ASIA & CASPIAN INTELLIGENCE KAZAKHSTAN c A contrasting economic and industrial landscape It is no easy task to measure the extent of the economic and of the world’s leading producers. In 2008 Kazakh uranium ex- financial crisis affecting Kazakhstan. We have already described ports totaled 8,500 tons, up by 28.1% compared to 2007. Kaza- the different measures taken in November and December to prop khstan’s total uranium production now represents 19% of the up the banking and real estate sectors (CACI n°39 dated Novem- world’s production. It is possible, moreover, that the uranium ber 6 2008), but a few recently published figures give a more pre- market is reaching equilibrium. Rates were under a lot of pres- cise idea of the extent of the damage. The ratings agency Fitch sure in the second semester of 2008. Experts predict that prices released a new report in early January indicating an estimated should stabilize in 2009 at around $50/$60 per pound and that 2.5% growth rate of the country’s GDP for 2008 and a 1% growth considering the medium term demand, they should gradually go rate in 2009, whereas the 2003-2007 period saw an average annual back up to $70/$80. This is expected to ensure the stability of growth rate of 9.6%. Fitch based its estimates on the assumption Kazakhstan’s export revenue. of an average $60 for a barrel of oil, which will make balancing the budget a real acrobatic feat. Problems in refinancing the pri- Finally, despite the crisis in Russia, all industrial oper- vate sector debt are expected. The sector is this year faced with ations are not frozen. Thus the purchase of KazakhGold by Polyus reimbursing some $14 billion. The quality of banking assets has Gold (whose main shareholders are still Vladimir Potanin and suffered (the rate of default on loans reached 7.6% in October Mikhail Prokhorov) is still on the agenda. On December 29 last 2008, as opposed to 3% one year earlier) although the four largest Polyus announced that it had lowered its offer (evaluating the banks in the country – Halyk, BTA, KKB and Alliance – claim Kazakh company at $593 million as opposed to $836 million ear- they do not need debt restructuring for the time being. The Cen- lier on). The price proposed by Polyus still represents a 200% tral Bank’s foreign currency and gold reserves are stable. On De- “bonus” (on the London market Kazakhgold plunged from $12 to cember 31, 2008 they were at $19.4 billion ($17.4 billion in for- $3 a share within a few weeks). Moreover, Polyus decided not to eign currency and $2 billion in gold), up by 1.6% over the previous finance the operation in cash as it had planned to do, but to pay month - not a bad result. The stability of foreign currency reserves in shares. This is an important transaction for Polyus as Kaza- is due in part to the steady export of raw materials. khGold is Kazakhstan’s leading gold producer. The company is today controlled by the Assaubaev family, which owns about 60%. This is especially true of uranium, of which Kazakhstan is one Its chief executive is Khanat Assaubaev. d IRAN ALERTS c The supreme leader in 3 Inter Rao to jointly manage Inguri support of Ahmadinejad power plant The political climate in Iran is tense and next June’s presiden- Although political relations between Georgia and Russia are at a tial election is expected to be feverish. President Mahmoud Ah- standstill, an agreement was signed on December 28 between the madinejad faces opposition from both more conservative as well Georgian government and the Russian company Inter RAO (which as more “liberal” sectors of society, against a backdrop of social handles the activities of the former RAO UES outside of Russia) for a and economic crisis. Given this situation, the fact that the Supreme ten-year period of joint management of the Inguri hydroelectric power Leader, Ayatollah Ali Khamenei, has publicly taken a stand in fa- plant, located on the border between Georgia and Abkhazia. This vor of Ahmadinejad, breaking with the tradition that the spiritual plant, along with the dam of the same name, the highest in the leader refrain from taking position in favor of a candidate, has Caucasus, built in 1988, is of vital importance for Georgia and Abkhazia. not gone unnoticed. In a long speech on December 13 last on the All the details of the contract between the Georgian government and occasion of National Student Day, Khamenei encouraged his com- Inter RAO have not been made known but it appears that the Russian patriots to vote for the candidate who would best respect the coun- company has the possibility of exporting electric power to Turkey and try’s “national identity”, to back Ahmadinejad a “revolutionary, that Inguri will also supply the city of Sochi, if needed, during the winter efficient and courageous leader” and to turn away from “weak and Olympics of 2014.
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