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Caucasus Report: April 3, 2008

Georgia: Latest Peace Proposal For Abkhazia A Nonstarter

By RFE/RL analyst Liz Fuller
Speaking in Tbilisi on March 28, Georgian President Mikheil Saakashvili unveiled the new peace proposal for Abkhazia he announced 10 days earlier. The proposal largely duplicates one that Saakashvili floated two years ago, and offers Abkhazia no higher status than "unlimited autonomy," which is the main reason Abkhaz officials cited for rejecting it out of hand.

A recent EU-sponsored paper by professor Bruno Coppieters of the Free University of Brussels highlights other serious flaws in Tbilisi's approach to resolving its conflicts with both Abkhazia and South Ossetia.

Saakashvili's offer of "unlimited autonomy" is a step back from the five-point 2006 proposal, the first point of which affirmed that "the Georgian side is ready to launch consultations to grant Abkhazia broad internal sovereignty based on principles of federalism." Outlining that proposal to the Georgian parliament, Irakli Alasania, at that juncture still Saakashvili's point man for Abkhazia, stressed that the alternative peace proposal unveiled earlier that year by de facto Abkhaz President Sergei Bagapsh, entitled "Key to the Future," was unacceptable to the Georgian side because it was predicated on the principle of recognition of Abkhazia as an independent sovereign state.

But in contrast to the 2006 peace proposal, Saakashvili's latest blueprint also entails the creation of a Georgian-Abkhaz free economic zone in the Gali and Ochamchira raions of Abkhazia. It also envisages amending the Georgian Constitution to create the post of vice president, which would be held by an Abkhaz; a veto by the Abkhaz on decisions by the central authorities that could negatively affect Abkhazia's constitutional status; and unspecified security guarantees. At the same time, Saakashvili called for the Abkhaz police force to be abolished as an independent entity and gradually subsumed into the national police.

Abkhaz leader Bagapsh rejected Saakashvili's March 28 offer the same day as "unacceptable" and as "propaganda" in the run-up to the April 2-4 NATO summit in Budapest, reported. Bagapsh pointed out that Abkhazia had autonomy within Georgia prior to the 1992-93 war, and that when the Abkhaz proposed a federation, Georgia responded by invading Abkhaz territory.

Indeed, the very term "autonomy" is anathema to the leaders of unrecognized republics because under the Soviet territorial-administrative system it was devoid of any substance. (None of the several dozen interviews with Bagapsh this writer has read in recent years clarify whether as a young Komsomol activist in April 1978 he participated in the mass protests at Lykhny to demand that the Soviet leadership redress the Abkhaz grievances' against the Georgian leadership and grant them "real" autonomy within the Georgian SSR.)

Abkhaz Foreign Minister Sergei Shamba for his part told on March 29 that Abkhazia has no intention of embarking on any talks with Tbilisi on "political issues," and ruled out talks on other issues "until the last Georgian soldier leaves the territory of the Kodori Gorge." Tbilisi deployed additional forces to Kodori in July 2006 to suppress a threatened insurrection by renegade local Governor Emzar Kvitsiani.

Georgian parliament speaker Nino Burjanadze attributed the Abkhaz leadership's rejection of Saakashvili's proposal to pressure exerted by Moscow. But that assumption fails to take into account several fundamental flaws in the overall Georgian approach that Coppieters discusses in detail.

First, Coppieters notes that previous peace proposals failed to address "the need for strong international safeguards against any attempt by the central government to use force against the federated state," even though the EU has stated its willingness in principle to send peacekeepers to both Abkhazia and South Ossetia.

Second, he argues that "impressive economic growth is not the key mechanism for turning a conflict that springs from issues of identity into a cooperative arrangement, particularly when the breakaway entities remain isolated and the Russian economy is part of the competition. The secessionist conflicts in Georgia are first and foremost about grievances, not about greed." Saakashvili's offer of a free economic zone is therefore unlikely on its own to effect a major change in the Abkhaz negotiating position.

Third, Coppieters suggests that any Georgian power-sharing offer is less than convincing given that "the difficulty experienced by Georgian democracy in dividing powers 'horizontally' between the executive, the legislature, and the judiciary does not bode well for its ability to divide powers 'vertically' between the federated entities and the federal level."

And fourth, "Georgia's conflict resolution policies make no basic distinction between the specific tasks of conflict prevention, conflict transformation, international conflict management, and conflict settlement. These four tasks within a conflict resolution policy become conflated into a single approach. Georgia considers that all these tasks need to be carried out simultaneously and in very swift order. But crash programs in conflict resolution do not seem to work."

Coppieters did not make the point in that context that repeated pledges by Saakashvili to restore Georgia's territorial integrity before his second presidential term expires are only likely to antagonize the Abkhaz, rather than contribute to the confidence-building process that is an integral component of effective conflict resolution.

Caucasus: Chechnya, Kabardino-Balkaria Compete For New Oil Refinery

By RFE/RL analyst Liz Fuller
The pro-Moscow Chechen authorities have launched a full-scale campaign to pressure the state-owed oil company Rosneft not to proceed with construction of a new oil refinery in the Kabardino-Balkaria Republic (KBR).

Rosneft's subsidiary Grozneftegaz still controls the extraction and sale of Chechnya's oil, from which it retains the lion's share of the profits, which one Chechen government official estimated in late 2006 -- before last year's massive oil-price increase -- at 25 billion rubles (marginally over $1 billion) annually.

The possibility that Rosneft would build a refinery in the KBR was first made public on November 22, 2007, by KBR Minister for State Property and Land Resources Mukhamed Sokhov, who told the republic's parliament that Rosneft planned to build a refinery in Tersk Raion with an annual capacity of between 3 million-5 million tons with the aim of expanding the republic's oil industry, reported on March 12.

Those plans encompassed the privatization of the state-owned company Kharbizhin that extracts oil from wells in Tersk. On November 30, Rosneft's vice president for investment, Aleksandr Sapronov, said the company would declare a tender for and finance a feasibility study for the refinery and then decide in conjunction with the KBR leadership whether it was financially expedient to proceed. Sapronov noted that both Chechnya and Stavropol Krai have similarly proposed construction of a refinery on their territory.

Speaking at a press conference in Nalchik on March 4, KBR President Arsen Kanokov affirmed that Rosneft plans to build an oil refinery in Tersk Raion, but he put its annual capacity at just 2 million tons, including crude extracted in Chechnya. Chechnya produced 1.9 million tons in 2004 and hoped to extract 2.2 million in 2005, but production apparently peaked at around 2.1 million tons in 2006 and is expected to fall in coming years, according to "Groznensky rabochii" on December 20, 2007.

Kanokov's statement elicited outraged protests from Grozny. Chechen parliament speaker Dukvakha Abdurakhmanov, a close associate of Chechen Republic head Ramzan Kadyrov, described it on March 12 as "an insult to the entire Chechen people," reported. Abdurakhmanov said that the Chechen legislature adopted the previous day an appeal to the Russian president and State Duma stressing the need for Rosneft to change its economic policies and spend more of the proceeds it receives from the sale of Chechen crude on reconstruction and solving social problems in Chechnya.

Chechen human rights ombudsman Nurdi Nukhadjiyev, who is likewise close to Kadyrov, denounced Rosneft's plans on March 14 as "amoral" and "incomprehensible" given that Chechnya's Oil Institute trains qualified specialists and in light of the high unemployment rate in Chechnya. Nukhadjiyev repeated criticisms voiced 18 months earlier by then-Chechen Industry and Energy Minister Amadi Temishev, who in October 2006 accused Rosneft of resorting to "barbaric" methods to maximize production without any heed for the ecological damage caused. Nukhadjiyev contrasted what he termed Rosneft's "colonial" approach with that of Gazprom, which is engaged in reconstruction of infrastructure destroyed during the fighting in Chechnya.

Nukhadjiyev further quoted Kadyrov as vowing that "he will never permit the construction outside Chechnya of a refinery to process Chechen oil." At the same time, Nukhadjiyev stressed that Kadyrov does not object to economic development in the KBR as such, and that Chechnya's opposition to the project is directed solely at the management of Rosneft. One week earlier, on March 6, Kadyrov told journalists that an oil refinery with an annual capacity of 5 million tons will be built in Chechnya, reported. In that context, Kadyrov stressed the need for establishing good working relations with Rosneft.

Chechen Prime Minister Odes Baysultanov duly met with Rosneft President Sergei Bogdanchikov and reported back to Kadyrov on that meeting, according to the Chechen government website on March 27.

Baysultanov reportedly argued that it would be economically more viable to site the planned refinery in Chechnya, rather than in the KBR, given that Chechnya's estimated oil production over the next decade will be 20 million tons as opposed to 7 million tons in Kabardino-Balkaria. Baysultanov implied that a formal agreement with Rosneft will be signed at a meeting in early April at which it is hoped to conclude a parallel agreement under which Rosneft will sell to the Chechen government at cost all the natural gas extracted together with the oil.

Baysultanov also told Kadyrov that a new agreement has been reached under which Grozny will receive a larger share of the profit tax from the sale by Rosneft of Chechen crude. The sum in question is approximately 300 million rubles ($12.8 million).