N°83 - September 11 2008 Published every two weeks / International Edition CONTENTS RUSSIA/GEORGIA P. 1-4 Politics & Government c RUSSIA/GEORGIA A Conflict Closely Tied to the Kremlin’s c A Conflict Closely Tied to the Kremlin’s Energy Energy Strategy Strategy One month, give or take a few days, after the start of the armed conflict between Georgia and c Russian Generals at the “Georgian Front” Russia leading to the recognition by Moscow of South Ossetia and Abkhazia as independent nations (Russia Intelligence n° 82 of 28 August), the following conclusions can be drawn: c Irakly Okruashvili: “The military option in Tskhinvali was injustified 1/ On the ground, Moscow remains in control of the timetable and of operations. The agreement PROFILE obtained by Nicolas Sarkozy in Moscow on September 8 represents but a minor thaw in rela- c Arkady Rotenberg, A New tions between Russia and the European Union. The only positive point is that a deadline was set Rising Star in the Putin for the removal of Russian troops from Georgian soil, which should be completed by mid-Octo- Network ber. Meanwhile, check-points, notably around Poti are being disassembled as we go to press. The ALERT fate of the “security zones” established by the Russian military along the Georgian sides of the c Fetisov Leaps into Ossetia and Abkhaz borders appears settled as Russia will leave them under the surveillance of Vladivostok European observers as of October 1. As for the rest, Dmitry Medvedev clearly spelled out to Nico- las Sarkozy, Jose Manuel Barroso and Javier Solana that recognizing the independence of South P. 5-7 Business & Networks Ossetia and Abkhazia is an irrevocable decision and that it is up to international institutions to OIL treat the two territories as sovereign nations. Furthermore, the long-term commitment of Russ- c TNK-BP: What is Behind the Compromise ian troops in Abkhazia and South Ossetia has been de facto established. The Russian defense minister Anatoly Serdyukov, said that 3 800 troops and officers will be stationed in South Osse- ALERT c Gazprom Sets its Sights on tia (versus fewer than 600 peacekeeping forces in place before August 7) and an equal number Nigeria in Abkhazia. Although the withdrawal of Russian troops from Georgian soil is a victory for French AIR CARRIERS and EU diplomacy, the main objective (a return to pre-conflict positions) has not been and will c Chemezov, Luzhkov and not be achieved in the short-term. Usmanov Outwit Aeroflot ALERT Elsewhere on the ground, the media war between Russia and Georgia continues. Russ- c Is Oleg Mitvol Teaming up ian television is replete with reports, investigations and “revelations” on the secret participation with Oleg Deripaska? of U.S. advisors and secret agents in the “Fascist aggression” of Georgian forces in South Osse- PIPELINES tia. Recently returned from Vladikavkaz (capital of North Ossetia) and Tskhinvali, (capital of c South Stream vs Nabucco : South Ossetia) Russia Intelligence can vouch to the significant destruction wrought by the Geor- Moscow Scores Some gian forces on sometimes surprisingly non-military targets including schools, the university, the Points parliament building and residential districts. The Georgian districts of Tskhinvali are empty of BEHIND THE SCENE their inhabitants and all the private homes, service stations or shops in these districts are de- c Udokan: High Stakes Win stroyed or burned. Graffiti visible on the soot-covered walls leave little doubt as to those respon- for Alisher Usmanov sible for the damage. It’s clear that “territorial continuity” between North Ossetia and it’s sister state, South Ossetia, is a reality despite the presence of an authentic border checkpoint. In Tskhin- P. 8 Regions & CIS vali, letters are carried by the Russian postal service. Between Vladikavkaz and the border, along CAUCASUS the single, mountain road that climbs toward the border with South Ossetia, there is evidence of c Ingushetia on the Brink progress being made on the gas pipeline that straddles the two republics. Work is moving ahead on the road widening project of the main access artery between the two capitals. It may not be SUBSCRIPTION Print Edition discussed officially, but integration between North and South Ossetia has begun and is wished (23 issues, airmailed overseas) for by most officials met in Vladikavkaz who cite reasons of “security” and “reunification”. €770 TTC The Web Pack 2/Georgia is facing a difficult re-armament problem. For Mikheil Saakashvili, seeing Russian (Print Edition troops leave Georgian soil offers short-lived relief. Faced with Moscow’s refusal to discuss issues + PDF + archives acess) of respect for the integrity of Georgia’s territory, the European Union appears to have accepted € 880 TTC the losses of South Ossetia and Abkhazia. Georgia finds itself in a very difficult position. Presi- The Premium dent Saakashvili faces domestic opposition that will become more and more vocal in coming Subscription weeks (see page 3; interview with former Georgian foreign minister Irakli Okruashvili and the (Print Edition + PDF + access last issue of Central Asia and Caspian Intelligence). Efforts by the president and his faithful to all the website contents) followers to hold the Russian Army responsible for the August 7 attack on Tskhinvali ddd € 1200 TTC www.russia-intelligence.fr RUSSIA INTELLIGENCE Politics & Government ddd have failed to convince due to a lack of hard, ver- 3/The Kremlin has comforted its regional energy stra- ifiable evidence. The unease within the ranks of the Geor- tegy. Diplomatically, the international community has not gian Army is palpable, both because of the high price in hu- finished with Russia and the latter will have to tread softly man life (treated as a state secret) and because of the severity in order to avoid threatening, once again, the current “sta- of the destruction inflicted on buildings and infrastructure bilization”. Nonetheless the Kremlin can claim to have as well as the manner in which combat occurred. Mikheil scored some tangible points towards consolidating its dom- Saakashvili was forced to undertake some brutal sackings in inant position in the Caspian and Central Asian energy recent days. The deputy chief of staff, Alexiy Osepaishvili, sectors. From this perspective, U.S. vice-president, Dick was replaced by artillery commander Devi Chankoladze, Cheney’s, visit to Baku on September 3 was a notable dis- while infantry commander, Mamuka Balakhadze, was sent aster. Dick Cheney and Azerbaijan president Ilham Alyiev, to Germany for training and replaced with Zurab Agladze. are old acquaintances since both have worked in the oil Furthermore, the commander-in-chief of the National Guard, and oil derivatives industry. Yet, Aliev sent a mere first vice- David Aptsiauri, responsible for the preparation and mobi- minister, Yagub Eyubov, to head the welcoming commit- lization of reserve troops was removed from his post thus pay- tee which greeted the US vice-president upon arrival. Later ing the price for the disastrous manner in which the reserves in the day, discussions stalled between Cheney and Aliev were deployed against the Russian forces. Georgia is loudly on topics such as gas pipelines linking the Caspian Sea to demanding that NATO and the United States provide aid for Europe while by-passing Russia (Nabucco, for example). new weaponry. For the moment, the West has remained pru- The Azerbaijan president wanted to do nothing that would dent. A NATO technical mission was recently dispatched on displease Moscow, to the point that Cheney decided not to site to evaluate the magnitude of the destruction to which attend the dinner offered in his honor. Cheney had barely the Georgian Army was subjected. It’s urgent to restore the left before Medvedev picked up the phone to Aliev, to set country’s Air Force but there is also a need to replace the up a meeting in the near future. The two met as recently thousands of automatic weapons and the dozens of armored as July in Baku to discuss potential gas sales by Gazprom vehicles that the Russians “recuperated”. But Russia has al- at “European” rates. Add to this recent Gazprom accords ready submitted a proposed resolution to the United Nations with Turkmenistan (Russia Intelligence n°82 of 28 Au- Security Council placing an embargo on arms sales to Geor- gust), discussions launched with Uzbekistan on the con- gia. This is bound to become a bone of contention between struction of a new gas pipeline (see Central Asia & Caspian the U.S. and Russia in coming weeks. In Russia, some of the Intelligence), it’s clear that Russia wants to impress on its military hierarchy is very critical of Georgia’s re-armament Western partners that it holds the key to access to the en- projects and has warned that it will be keeping a vigilant eye ergy resources of the Caspian and Central Asia region. But on events. The next episode could be played out at the NATO more than anything it wants to prove that, as far as Europe meeting (ambassador level) scheduled in Tbilissi on Septem- is concerned, Georgia has now become a liability rather ber 15 and 16. than an asset. d Russian Generals at the “Georgian Front” Nearly unanimously declared a brilliant military success, the well-coordinated and led by General Viktor Astapov and Admi- “Five Day War” brought to the fore the crucial role played by a ral Sergey Menyaylo. For the Navy, the commander of the dozen high-ranking officers in the field and in Moscow. Black Sea Fleet’s flagship (the missile-launching cruiser, One of the most visible was Vyacheslav Borisov. The deputy Moskva), Igor Smolyak, commanded the group which des- commander for airborne training, a rotund man with a rich vo- troyed most of the Georgian Navy in Poti.