Russia's Chechen War More About Politics Than Oil This Time
Moscow, Oct. 12 (Bloomberg) -- When Russia first went to war in Chechnya in 1994, one reason was to ensure control of a transit route for Caspian oil. Five years and more than 80,000 lives later, the pipeline has proven unnecessary. Yet the fighting has resumed.
The pipeline, which runs through Chechnya to the Russian port of Novorossiysk, was considered worth fighting for because of expectations the Caspian Sea region would yield an oil bonanza that would bring profits to producers and transit states alike.
Now that pipeline has been closed and an alternative route built that bypasses both Chechnya and Russia en route to the port of Supsa in Georgia. BP Amoco Plc and other oil companies in the region say that pipeline should be sufficient because the Caspian doesn't have as much oil as previously thought.
``The problem of oil transit triggered the war in 1994,'' said Nikolai Petrov, an analyst at the Carnegie Foundation in Moscow. ``Now, the significance of the oil argument looks questionable.''
A more important reason, said Petrov, is the government's need to win some battles ahead of December parliamentary elections and next year's presidential election.
After two years of war, from 1994 to 1996, and three years of uneasy peace, Russia closed the Novorossiysk pipeline this summer after it was repeatedly sabotaged and the oil stolen. Now, Russian troops again are fighting in Chechnya, in an attempt to destroy Islamic militant groups that invaded the neighboring republic of Dagestan. Russia also accuses Chechen rebels of planting bombs in several Russian cities last month that killed more than 300 people.
Russian troops have taken control of Chechnya's northern plains and continue shelling the southern, mountainous region that has been the rebels' traditional stronghold. More than 100,000 refugees have fled Chechnya since the bombing and shelling started.
Justification
Russian officials continue to mention the pipeline as a justification for the war, along with the fighting in Dagestan and the terrorist bombings in Moscow and elsewhere.
Last week, Fuel and Energy Minister Viktor Kalyuzhny said the government is planning to build a new stretch of the now-closed Novorossiysk pipeline to bypass Chechnya through Dagestan.
That plan isn't likely to get much support, however, because Dagestan itself has been the scene of recent fighting and because of the lower estimates of the Caspian's potential oil reserves.
Companies are witnessing the ``pricking of the balloon'' in the Caspian region, said Stephen O'Sullivan, head of research at United Financial Group in Moscow. ``The reality is setting in now: the Caspian is not a new Middle East.''
Short of Expectations
A BP Amoco-led group of 11 international oil companies is the only one currently pumping oil off Azerbaijan's shore in the Caspian Sea. A Pennzoil Corp.-led group and another BP Amoco-led one stopped operations there earlier this year, having failed to discover commercial amounts of oil, and Atlantic Richfield Co. withdrew from yet another project last month.
``Now it's clear that Caspian oil deposits aren't as big as it was thought,'' said Russian Deputy Fuel and Energy Minister Valery Garipov. ``It may be just over 6 billion barrels -- but definitely not the 12 billion that we used to hear about.''
A few months ago, another group led by BP Amoco struck gas -- not oil -- in the Caspian Sea.
Initially, the Russian government's plan was to subdue Chechnya and secure deliveries to Novorossiysk, clearing the way for the main pipeline to go along the same route, an option opposed by the U.S., Turkey and Azerbaijan, which want the new pipeline to terminate at the Mediterranean port of Ceyhan, Turkey.
Both options are opposed by BP Amoco, the most active Western oil company in the region, and potentially the biggest customer for any new pipeline. BP Amoco maintains the current output of oil doesn't justify building the $2.4 billion pipeline at all.
``Presently, there's enough oil to expand the Supsa pipeline, and definitely not enough oil to support several pipelines,'' O'Sullivan said.
BP Amoco's Plans
Expanding the Supsa pipeline is exactly what BP Amoco said it's planning to do. BP Amoco Associate President David Woodward said that's the company's plan because the Ceyhan route would need as much as 8 billion barrels of oil to justify the costs.
The reality is that the war in Chechnya has little to do with oil or pipelines, said Carnegie's Petrov. The war is really about the December parliamentary elections and next year's presidential election, Petrov says.
``Even in 1994, there was also the need for a small victorious war as elections approached, as well as fear of the separatist fever'' in addition to the concerns about the pipeline, he said. ``Now, it's election time again. This small war may also provide for establishing a semi-police regime, to prevent the power from falling into hands that the Kremlin sees as wrong.''
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Christian Science Monitor 12 October 1999 Putin's risks in Chechnya By Fred Weir , Special to The Christian Science Monitor
Russia's war against breakaway Chechnya is escalating amid worries that Moscow hawks may be seeking to launch a knockout blow against political opponents at home as well as the rebels in Chechnya.
For the past week, Moscow has been rife with rumors that Army generals hoping to avenge their 1996 defeat at the hands of Chechen guerrillas, allied with tough-talking Prime Minister Vladimir Putin, may have sidelined President Boris Yeltsin and are preparing to plunge into full-scale war in the turbulent Caucasus. That speculation reached a climax over the weekend when Mr. Yeltsin was hospitalized for what the Kremlin described as "flu." By yesterday, however, the Russian leader was recuperating at his country home.
"These rumors about Yeltsin passing his powers are just an attempt to drive a wedge between the president and the government," his deputy chief of staff told journalists. The situation is strongly reminiscent of the 1994-96 war to crush Chechnya's independence drive, when Yeltsin frequently disappeared and left subordinates to take the heat for risky military decisions.
He may once again deliberately be distancing himself from a war that is threatening to spin out of control. Over the past two weeks, Russian forces have occupied the northern plains of Chechnya. Most experts believe the plan is to create a pro-Moscow regime in this "liberated territory," which is about a third of the republic, and wait for the government of Chechen President Aslan Makhadov to crack.
Despite heavy fighting over the weekend, Russian losses remain relatively low. Chechnya has been hammered by the steady bombing of its roads, airports, and economic infrastructure. Observers report that civilian targets are also being hit, despite Russian claims to the contrary.
Russian military leaders may now be thinking of making a lunge for the capital. "If the Chechen people ask us to liberate Grozny, we will do it," Defense Minister Igor Sergeyev said Sunday night. In the previous war, Grozny was a key battleground where Russian troops suffered huge losses.
Analysts say Yeltsin's illness may be a sign that an assault is about to begin.
For Mr. Putin, his anointed successor, it is a make-or-break moment. Parliamentary elections are slated for Dec. 19, with a presidential contest six months later. Since the new Chechen war began, Putin's rating as a presidential candidate has shot up from 2 to 12 percent, according to the independent Vox Populi polling agency.
"Putin is manipulating the situation for his own political purposes, and so far it's working splendidly," says Martin Shakkum, director of the Reforma Foundation, a Moscow think tank. But Mr. Shakkum adds, "Putin has one huge vulnerability. Yeltsin can fire him any time. All it takes is one bad step."