PRAGUE, 2 February 2006 (RFE/RL) -- The bitterness that runs through Russian-Georgian relations was again on vivid public display at President Vladimir Putin's Kremlin press conference on 30 January.
Asked by a Georgian journalist whether the recent pipeline explosions in Russia that cut off the gas supply to Georgia were part of an energy war against Tbilisi, Putin criticized the Georgian government. The problem, he said, was that certain political leaders in Georgia appeared unable to adequately appreciate the state of relations between the two countries.
"So, a misfortune has happened -- yes, supplies [of gas to Georgia] have been stopped. But our specialists are working night and day in the mountains in minus 30 degrees [Celsius] of frost in order to restore energy supplies to Georgia. And what do we hear and see from the Georgian leadership? They just spit at us," Putin said.
That is not of course how the Georgians see things. President Mikheil Saakashvili is no less bitter than his Russian counterpart. He has accused Moscow of deliberately sabotaging the pipeline in the middle of the coldest Georgian winter in decades.
"The aim of the explosions was to demoralize Georgia and show the entire world that we were weak and a feeble country without perspective," Saakashvili said. "Instead, this sabotage produced completely the opposite result: it turned out that we have a very strong society. Our society emerged strengthened from this crisis."
The chasm that divides Georgia and its resentful northern neighbor is becoming wider. And that will perhaps have important consequences for Russia's control of the South Caucasus.
As in Ukraine and the Baltic states, Russia's leverage has rested in considerable part on control of the energy supply. Until this month, Georgia was 100 percent dependent on Russian gas. Not any more. At the critical moment, Georgia turned to Iran for help and got it.
"Today [30 January], an event of historical importance has occurred, thanks to the fact that last year we restored the [Iran-Azerbaijan-Georgia] pipeline in readiness for just such an eventuality. For the first time since the restoration of Georgian independence, Georgia is being supplied not just with Russian gas but with an alternative source. Of course, we will sharply strengthen our work in this direction," Saakashvili said.
Gas From Iran
It's the last sentence that is the really significant one. It appears to suggest that the Georgians would like to make the Iranian solution a permanent one. Georgia's Energy Minister Nika Gilauri, back from talks in Iran, said that Russian policy has played a clear role in prompting Georgia to secure the independence and security of its energy supply. "Although in any case, any country with just one supplier of energy would be forced to look for additional sources and additional supplier countries," he said.
The gas from Azerbaijan and Iran delivers about 4 million cubic meters a day -- still just 30 percent of Georgia's needs.
But from next year Georgia will have more options when the completion of the Baku-Tbilisi-Erzurum pipeline brings gas from Azerbaijan's Shah Deniz line on stream.
Might it not irritate Washington, though, that its ally in the Caucasus is turning to Iran for help?
When Saakashvili spoke by telephone to U.S. Secretary of State Condoleezza Rice on 30 January, Georgia's energy problems topped the agenda. Given the U.S. desire to strengthen Georgia's economic independence -- and in particular its energy independence -- it seems prepared to turn a blind eye to Georgia's Iranian deal. The Georgian president's press office reported after the conversation with Rice that the United States was "ready to provide assistance in ensuring the energy security of Georgia."
But the ramifications of this particular spat don't stop in Georgia. Armenia, the most loyal of Russian allies, has also begun to grumble. The pipeline that supplies its gas from Russia is the same one that supplies Georgia -- so the explosions cut its gas off as well. And Gazprom has also just doubled the price of gas to Armenia (and Georgia) to $110 per 1,000 cubic meters.
Little wonder then that the Armenians regard the latest crisis as complete vindication of their decision to begin importing gas from Iran using a pipeline now under construction. Russia is believed to be opposed to the project and, according to the Moscow daily "Kommersant," offered at one point to keep the gas price at $59 in return for a 45 percent stake in the Armenian section of the pipeline. This prompted outrage in Armenia but was immediately denied by Armenian presidential spokesman Viktor Soghomonyan.
But the controversy may not stop there. Iran -- and Georgia -- would like to link the new Armenia-Iran pipeline up to the Shah Deniz line that is now nearing completion. This would give Georgia even greater access to Iranian gas and link the Iranian market up to Europe. Some observers have speculated that Russia has forced the Armenian government to reduce the pipeline's planned diameter to prevent Iranian gas being re-exported.
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- Ukraine consumes 70 billion cubic meters (bcm) of gas per year. It produces 20 bcm of its own gas, has a signed contract to import 40 bcm from Turkmenistan, and in 2005 was getting 29 bcm from Russia as payment for transit of Russian gas.
- Ukraine sells some 7 bcm of gas a year to the West and places some in underground storage facilities. These facilities can hold 34.5 bcm.
- Ukraine is the sixth-largest consumer of gas in the world and uses more gas than Poland, the Czech Republic, Hungary, and Slovakia combined.
- Russia has proven gas reserves of 47 trillion cubic meters (tcm) -- the largest in the world ahead of Iran and Qatar.
- Russia sells approximately 160 bcm to Europe each year. By 2015, Europe is expected to import 300 bcm, or 40 percent of its projected needs from Russia.
- Russia's Gazprom is the world's largest gas company. It is the only company allowed by Russian law to export gas outside the borders of the CIS. It also owns the gas-transportation system and most of the gas fields in Russia.
- The Russian state is Gazprom's majority shareholder , with a 51 percent share. The company's ownership rights changed as of the beginning of 2006, with Gazprom stock being sold on the open market. The Russian state, however, will continue to hold the majority stake.