Eurasia Daily Monitor — The Jamestown Foundation
Thursday, April 6, 2006 — Volume 3, Issue 67
IN THIS ISSUE:
*President of Adygeya disappears after conflict with Kremlin
*Moscow targets joint Armenia-Iran energy projects for takeover
*Russia, Kazakhstan ink new deals on energy and military cooperation
KREMLIN PLAN TO MERGE ADYGEYA MEETS UNEXPECTED OBSTACLE
On April 4, the second session of the newly elected parliament of
Adygeya, a region in the western section of the North Caucasus, ended
abruptly when President Khasret Sovmen announced his resignation.
The Adygei leader had come to parliament to observe the process to
select the chairmen of 12 parliament committees. Fierce debate erupted
between members of the pro-Kremlin United Russia Party, which has 30
seats in the Adygei legislature, and the opposition Communist and
Russian United Industrial Parties, which have a total of 13 seats.
Sovmen asked for the floor, presumably to broker a compromise. However,
parliamentary chair Ruslan Khadzhibekov refused to allow the Adygei
leader to speak. Then Sovmen handed the speaker a written statement. But
instead of reading it aloud, Khadzhibekov said that the statement would
first be reviewed by the Political Council of United Russia; both Sovmen
and Khadzhibekov are members of the pro-Kremlin party.
Despite the speaker’s obvious resistance, Sovmen managed to take the
floor following a break. His speech stunned the assembled deputies. “I
have decided to resign,” he declared. “Moscow does not understand me.
Even if I step down from the president office, I will provide the
republic with economic and social help.” Sovmen wished the parliament
good luck and suggested possible successors, including Adam Zhane,
minister of health, and Murad Kudaev, the head of Adygeya’s
Krasnogvardeisk district (Kommersant, April 5).
Sovmen left the parliamentary chamber after his speech, accompanied by
several loyal deputies. According to Kommersant, Sovmen went to the
Government Palace to await a phone call from the Kremlin. He did not
have to wait for long; the phone call from Moscow came within 30 minutes
and radically changed the situation.
Following Sovmen’s conversation with Moscow, the Adygei presidential
office issued a press release. “The deputies and journalists
misunderstood the statement made by the president,” it read. “There are
no grounds for broadcasting information about his resignation.”
According to press secretary Abrek Chich, “The president reacted too
emotionally to what was going on during the session. When he entered the
parliament, some deputies defiantly did not stand up and when Khasret
Sovmen saw that the deputies had no common ground and synergy, he
announced that there was no use trying to work with such an attitude.”
Several hours later the United Russia parliamentary faction held a
special meeting and appealed to Russian President Vladimir Putin to
extend Sovmen’s authority by another term.
The next day, April 5, the political crisis in Adygeya took a disturbing
turn: Sovmen disappeared. Vedomosti reported that even officials from
Putin’s administration were unable to locate him. An unnamed source in
Putin’s administration described Sovmen’s behavior as “unclear
vacillation that destabilizes the situation in the region.” The source
also said that Sovmen’s resignation might be accepted as early as the
end of this week (Vedomosti, April 5). However, another source in the
Kremlin left open the possibility that Putin would reappoint Sovmen
(Kommersant, April 5).
Russian pundits offered a variety of explanations for Sovmen’s demarche.
Kommersant reported that the Kremlin was dissatisfied with Sovmen’s
economic policy and that he was resisting a proposal to incorporate
Adygeya into Krasnodar Krai, which is dominated by ethnic Russians (see
EDM, April 29, 2005). According to political observer Oksana
Goncharenko, “The danger now is that the local parliament will split
into equal parts, including followers and opponents of Sovmen” (Novye
izvestiya, April 5). The opposition, consisting mostly of ethnic
Russians, advocates holding a referendum in Adygeya on the issue of
unification. This would be the easiest way for the Kremlin to dissolve
Adygeya, as the majority of the population in the republic consists of
Russians who would vote for such unification. According to Alexander
Konovalov from the Institute of Strategic Estimates and Analyses, the
president of Adygeya was called to Moscow where attempts were made to
persuade him to agree to the unification. Instead, he went to parliament
to resign in protest.
The new Adygei parliament, elected on March 12, has only one chamber,
unlike the previous body. It will be much easier to push the referendum
law through a unicameral parliament, which had been blocked by the upper
chamber of the old legislature. Adopting the referendum law opens the
door for unification, which the Kremlin has long tried to engineer.
Parliamentary speaker Khadzhibekov is loyal to the Kremlin and will not
resist Adygeya’s incorporation into Krasnodar Krai. Relations between
Khadzhibekov and Sovmen are strained, because Moscow sees Khadzhibekov
as the region’s next president. This explains why Khadzhibekov did not
let Sovmen speak first at the session and why the Adygei leader
mentioned two regional politicians as his preferred successors.
Understanding that the Kremlin wants to get rid of him to clear the way
for the merger, Sovmen decided to play an all-or-nothing game,
knowing that Moscow has not yet decided what to do with him and with
Adygeya. The Adygei president’s bold move may have been intended to
frighten Putin, who often moves tentatively to avoid making missteps.
Sovmen’s open threat to resign demonstrated that the Adygei leader
continues to be an independent regional political figure, a quite rare
species in Putin’s Russia. But Sovmen must act boldly, as the Adygei
people would not forgive him if he betrays the idea of Adygeyan
autonomy.
–Andrei Smirnov
BLESSING ARMENIA’S DEBT SERVITUDE
On March 31 in Moscow, the Foundation for the Orthodox Peoples’ Unity
bestowed its annual award on Armenian President Robert Kocharian and
Russia’s Gazprom company for their support to Russian spiritual and
religious values (Noyan Tapan, March 31). By fortuitous coincidence,
Gazprom doubled the price of gas to Armenia, effective April 1. The
price hike will deepen Armenia’s economic dependence and structural
indebtedness to Russia.
Russian President Vladimir Putin had personally announced in December
2005 that the gas price to Armenia would double as of January 1. In
early January, however, Putin granted a reprieve until March 31, so as
not to hit allied Armenia too hard in winter, but also to negotiate
another transfer of Armenian infrastructure and energy-sector assets to
Russia as payment for the higher gas bill after April 1. On April 5,
Kocharian publicly hinted that such an arrangement is in the making
(Armenian Public Television, April 5).
The gas price has now risen from to 0 per one thousand cubic meters
delivered at Armenia’s border. As a result, the price of gas consumed in
Armenia is rising in one fell swoop by 52% to households and by 85% to
industrial and commercial enterprises, effective on April 10. Armenia’s
Public Utilities Regulatory Commission approved the new rates already on
March 10 — an indication that Moscow was not prepared to grant any
further short-term reprieve.
Furthermore, the Russian-controlled, gas-fired Hrazdan electrical power
plant — the largest in Armenia — has announced its intention to raise
the price of electricity by 90% for households and enterprises, in
connection with the price hike on gas. Russia’s Unified Energy Systems
(UES) operates the Hrazdan plant under a 99-year lease, as part of the
debt-for-assets deal that settled Armenia’s debts to Russia in
2002-2003. Six Armenian industrial enterprises were ceded to Russia in
that deal as well.
Previously, Armenia had ceded control of the national gas transport and
distribution system to a mixed company, ArmRosGaz, in which Gazprom
holds a 45% stake, Gazprom’s affiliate Itera another 10%, and Armenia’s
Energy Ministry the remaining 45% stake, which may now be further
eroded. Moscow wants the handover process to continue, so as to render
Armenia’s economic dependence complete and irreversible.
Moscow is now making an offer that, by its reckoning, the destitute
Yerevan can hardly refuse. It proposes either temporary price relief on
gas, or a temporary price-offsetting mechanism to alleviate the social
impact, on the condition that Yerevan transfers additional assets to
Russia. These could include: part of Armenia’s remaining stake in
ArmRosGaz, or Armenia’s stake in the Iran-Armenia gas pipeline under
construction, or the fifth power bloc under construction by Iran at
Hrazdan. That fifth bloc, Hrazdan’s largest and most modern, is co-owned
by Armenia and Iran independently from the four Russian UES-operated
blocs and is valued at some 0 million in the ongoing discussions.
If Yerevan hands over such assets, Moscow could recalculate the price of
gas downward to or per one thousand cubic meters; or, alternatively,
Yerevan can use the proceeds from such handovers in order to compensate
the populace for the doubling of the gas price. According to credible
reports, not denied by Armenian officials and partly corroborated by
some of them, Yerevan and Moscow are now discussing a solution along
those lines, to apply for a two-and-a-half year period. The Hrazdan
plant’s fifth power bloc alone — the largest and most modern, co-owned
by Armenia and Iran separately from Russia’s UES — is valued at some 0
million in these discussions.
Gazprom and Itera supplied Armenia with 1.7 billion cubic meters of gas
in 2005 and intend to deliver 2 billion cubic meters in 2006. This gas
originates in Turkmenistan, reaching Armenia by pipeline via Kazakhstan,
around the northern bend of the Caspian Sea and through the North
Caucasus and Georgia. This is the pipeline that was blown up
(simultaneously with another pipeline and an electricity transmission
line) by never-identified saboteurs on Russian territory in January,
causing severe hardship to Georgia and Armenia.
Until 2005, Gazprom and Itera were buying Turkmen gas at per one
thousand cubic meters and reselling it to Armenia at to . This year,
Turkmenistan sells its gas for per one thousand cubic meters to Russia.
Thus, the Russian price hike to Armenia is highly disproportionate to
the Turkmen hike.
Apparently, Moscow feels free to resort to economic extortion of Armenia
and takes its political loyalty as an ally for granted. Moreover, by
targeting the joint Armenia-Iran energy projects for takeover, Russia
intends to rule out for the long term any alternative to its own
monopoly in Armenia. For its part, the Armenian leadership seems content
to accept the type of short-term price relief that goes together with
long-term insecurity and debt servitude for the country.
(Interfax, Noyan Tapan, Armenpress, Mediamax, PanArmenianNet, March
30-April 6; Haikakan Zhamanak, March 29, 31; see EDM, January 17, 20)
–Vladimir Socor
NAZARBAYEV’S GROWING CONFIDENCE ON VIEW IN VISIT TO MOSCOW
Kazakh President Nursultan Nazarbayev received a warm welcome during his
April 3 visit to Moscow. Friendly relations were emphasized when
Nazarbayev dedicated a new monument to the 19th-century Kazakh poet Abai
Kunanbayev, a devoted Russophile. Speaking at the ceremony, Russian
President Vladimir Putin noted that this event, as well as the erection
of a similar monument to Russian poet Alexander Pushkin in Astana,
symbolizes the long tradition of friendship between the two countries.
Nazarbayev and Putin signed seven bilateral agreements covering energy
and fuel cooperation, the use of the Saryshagan test site by the Russian
military, and cooperation between Kazakhstan’s Eurasian Industrial Group
and Russia’s Vneshekonombank, and between the Foreign Ministries of the
two countries. Moscow also pledged to help Astana putting the first
Kazakh satellite — Kazsat — into orbit (Khabar TV, April 5).
The Kremlin is using every pretext to secure a strong military foothold
in Kazakhstan following Tbilisi’s repeated demands for the Russian
military to withdraw from its bases in Georgia. Astana regarded Russia’s
recent ban on imports of Georgian and Moldovan wines (see EDM, March 28)
as a response to swelling anti-Russian sentiments in these countries.
With an amazing promptness, just before Nazarbayev’s trip to Moscow, the
Sanitary Inspection Department of the Kazakh Ministry of Health ordered
an inspection of imported Georgian and Moldovan wines. The head of the
department, Anatoli Belonog, said that, if the wines pose health
hazards, such imports might be banned in Kazakhstan as well (Megapolis,
April 3).
The current military and political ties between Russia and Kazakhstan
are hardly conducive to fostering friendship among equals. In Astana,
the Kazakh government sporadically comes under fire from nationalists
for granting Russia a 50-year lease on the Baikonur launch site, which
is in the environmentally vulnerable Kyzylorda region. The lease on the
Saryshagan test site is likely to draw additional protests.
But these sacrifices and concessions are inevitable for Kazakhstan,
which is desperately seeking to build up its military force with Russian
help. At a press conference in Astana the chairman of the Committee for
Scientific and Technological Development of the Ministry of Industry and
Trade, Meyram Kazhyken, announced plans to set up a Russian-Kazakh joint
venture to assemble Kazakh Ansat and Aktay helicopters based on the
Russian MI model. Some helicopter parts may be manufactured in the
former munitions plants of Aktobe, Almaty, and Petropavlovsk. But
Kazhyken pointed out that it would take 10-15 years before even 30% of
the production could be relocated to Kazakhstan (Sayasat, April 1).
The price for Russian assistance in modernizing the Kazakh army is
political loyalty to the Kremlin. Aware of this pitfall, Astana seeks to
diversify its military partnerships and avoid relying entirely on Moscow
for sophisticated weapons. For example, Kazakhstan inherited a
well-developed Soviet space-flight monitoring system that could be used
to modernize its air defense system with help from Singapore
Technologies.
Astana has also made significant steps toward greater energy
independence from Moscow by bidding for stakes in the Yukos-owned
Mazeikiu Nafta complex in Lithuania. Ironically, on the eve of the
Nazarbayev-Putin talks in Moscow, the Lithuanian newspaper Lietuvos
Rytas announced that the Lithuanian government was seeking to buy back a
57.3% stake in Mazeikiu Nafta from Yukos and then sell it to
Kazakhstan’s state owned company, KazMunayGaz (Vilnius BNS, March 31;
also see EDM, April 5). Kazakhstan’s closer ties with China also help
counterbalance Russia’s drive to monopolize hydrocarbon transportation
routes through Kazakhstan.
Astana has enthusiastically embraced the idea of a “Greater Central
Asia” region and Kazakh Foreign Minister Kasymzhomart Tokayev recently
went to Afghanistan to attend an international conference on
“Partnership, Trade, and Development within Greater Central Asia,”
sponsored by Johns Hopkins University. He also made sure to extend a
personal message of friendship from Nazarbayev to Afghan President Hamid
Karzai. Tokayev said that Greater Central Asia, which includes a
politically and economically diverse grouping of Iran, Afghanistan, and
Azerbaijan, parts of China, Western Siberia and the Urals of Russia,
particularly interests Kazakhstan as a promising energy transportation
route extending from Central Asia to the Persian Gulf via India and
Pakistan. The Kazakh foreign minister stressed that Afghanistan should
be part of Greater Central Asia linked with Almaty, Bishkek, and
Dushanbe
via a Trans-Afghan highway running through Kabul to Kandahar. Kazakhstan
also offered to train Afghan medical workers and engineers
(Kazakhstanskaya pravda, April 4).
Tokayev addressed the conference on behalf of all Central Asian states
without fearing any criticism from Kazakhstan’s neighbors. It is a clear
sign of Astana’s growing confidence in spearheading an alliance of
Central Asian countries. Nazarbayev’s March 19 visit to Tashkent also
contributed much to the rapprochement between Uzbek President Islam
Karimov and Putin, and Karimov spoke in favor of a Kazakh-Uzbek alliance
and putting priority on a partnership with Russia in foreign policy (see
EDM, March 22). However, Astana takes a more cautious approach toward
Moscow and tries to neutralize the Kremlin’s attempts to return the
Central Asian states to the Russian fold. Kazakhstan’s foreign policy
program for 2006 -2008 points out that Kazakhstan “will pursue a
balanced and responsible foreign policy.” The Kremlin should not be
overly optimistic regarding “eternal friendship” with Astana.
–Marat Yermukanov
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