Reforming the National Security Council of Georgia

by Giorgi Kvelashvili

On August 7, 2009, in an unprecedented move for a post-Soviet state, President Saakashvili invited opposition leaders to the newly built presidential palace to attend what was dubbed “the first expanded meeting of the National Security Council of Georgia.” Symbolism aside, this event marks a new era in Georgia’s consolidation as a modern state and is a major step in its democratic development.

The Council gathered to mark the first anniversary of the Russian invasion of Georgia on August 7, 2008. Mr. Saakashvili apparently wanted to demonstrate his country’s defiance in the face of Russia’s ongoing occupation in Georgia’s Abkhazia and Tskhinvali regions and the resolve of Georgian society to face new threats from its northern neighbor.

The presence of the leaders of all factions of parliamentary opposition in the meeting was noteworthy enough, but even more significant was the participation of some of the most vocal opponents of President Saakashvili’s government from the so-called radical opposition, who just weeks ago led continuous rallies in Tbilisi to demand the president’s resignation.

Warmly greeting his political rivals, Mr. Saakashvili said “as we all can see, when we do not speak in loudspeakers, we can hear each other even better. This will only make our country stronger.” He thanked the opposition for their active participation in the meeting and “for sharing their viewpoints with the government.” Stressing the importance of political dialogue, he added: “This is no more just a monologue about the need to talk to each other; we are decisively engaged in productive dialogue.”

The Georgian leader indicated that “expanded sessions” of the Security Council – the president’s chief advisory board – will occur regularly and asked other opposition leaders to participate in the future: “Our enemy would not be happy to see all of us gathered in this hall…It is a great disappointment to them, but it is the best message we can send to the Georgian people.” He also noted, “This event also shows how Georgia has advanced along the path of democratic transformation, with its political leaders both in the ruling party and the opposition showing responsibility and growing maturity in spite of serious differences on many issues.”

Irakli Alasania, leader of the newly created Our Georgia-Free Democrats opposition party, in his interview to the Georgian TV channel Rustavi 2, said that he raised two issues during the meeting: “One issue is related to external threats against the background of the continuous Russian occupation, which must be common for every political force, and the second one concerns the end to the political harassment in the country.” He announced that the opposition leaders “already reached agreement with the government to discuss this topic during the upcoming meetings with the top-level officials in the Ministry of Internal Affairs.”

One of the leaders of the Christian Democratic opposition faction in Parliament, Levan Vepkhvadze, who also attended the meeting, added that “reform of the Security Council will be the focus of the upcoming discussions with Eka Tkeshelashvili, Secretary of the Security Council.”

President Saakashvili hopes that continued dialogue with the opposition will help consolidate Georgian society, increase trust between political leaders and ameliorate the political climate before the municipal elections next year. Apparently, the Security Council will be permanently transformed to ensure the participation of the opposition parties, making room for constant dialogue and political debates. At the same time, the Ministry of Internal Affairs also plans to host a series of meetings with the opposition to address their grievances on the alleged “disproportionate use of force” to counteract excesses by some opposition activists during recent street rallies in the capital Tbilisi.

It is worth recalling that U.S. Vice President Joseph Biden, during his visit to Georgia at the end of July, particularly stressed the significance of the peaceful 2003 Rose Revolution that signaled the dawn of democratic transformation in the post-Soviet space. Moreover, he eagerly noted that “the Rose Revolution was a clear signal to the world that we have entered the 21st century, and the shackles of the 20th century have been shed.” Support for freedom and democracy is “a bipartisan sentiment in my country,” Mr. Biden told the audience.

Giorgi Kvelashvili holds a Master's degree in International Relations from Yale University, and currently serves as a research assistant at the Jamestown Foundation.

Ukraine Stockpiles Gas for Possible Gas War

Russia Turkey Sign South Stream Deal




by Roman Kupchinsky

Ukraine is preparing for a new “gas war” with Russia according to the Russian newspaper Nezavisimaya Gazeta. The new conflict, according to this prediction is expected to begin in December. As proof, the Russian newspaper reported on August 7 that Naftohaz Ukrayiny, the state-owned gas and oil company stated that it had already stored 22.7 billion cubic meters (bcm) of gas in its underground storage facilities – the total capacity of which is 32 bcm.

Earlier, Ukrainian Prime Minister Yulia Tymoshenko said that by the end of 2009 the country would have 27 bcm squirreled away – enough to ensure sufficient supplies for the fall-winter heating season. Ukraine's ability to reach this level is suspect and if Naftohaz is unable to meet the Prime Minister’s goal, Eastern and South Central Europe, dependent upon Russian gas transiting Ukraine, might once again face shortages as they did in January 2009.

Thus far Kyiv has been meticulous in paying Russia’s Gazprom for gas deliveries in 2009. On August 5, Naftohaz paid its bill of $605 million for July. Gazprom, which has been claiming every month that Ukraine would be unable to meet its payment deadline, once again refused to comment.

The money however was made available to Naftohaz through a new emission by the Ukrainian Central Bank. Whether the Ukrainian government is willing to risk such a maneuver again is doubtful. It appears to be relying on the European Commission’s recently approved loan of $1.7 billion by European banks and the World Bank to Ukraine which is to be finalized only in January 2010.

U.S. Special Envoy for energy, Richard Morningstar told Trend Capital that the United States does not view the South Stream pipeline project as a competitor to the Nabucco pipeline.

“Nabucco and the South Stream shouldn’t be viewed as competitors. The U.S. policy is to diversify the energy security of Europe by different resources,” Morningstar said.

The comments came after Russian Prime Minister Vladimir Putin’s visit to Turkey in early August where he convinced his Turkish counterpart, Recep Tayyip Erdogan, to allow Russia to begin initial work on South Stream.

“It’s clear now that the South Stream pipeline is a reality, and it [is] particularly important in the context of providing energy security for the whole of Europe, and in developing complex relations between Russia and Turkey. Our talks have shown that with Turkey’s leadership we can come to decisions that open the door to massive new energy projects,” Putin said.

It appears that Turkey did not have much choice but to sign the South Stream agreement. It not only receives two-thirds of its gas from Russia, but by supporting both the Russian project and Nabucco, it helps Turkey become a vital gas hub for Europe and improves its bargaining position in its bid for EU membership.

Russia’s Triads - Chinese Organized Crime in Russia

by Roman Kupchinsky

The jewel in the crown of the Russian Far East is Vladivostok, a hilly maritime city often compared to San Francisco. And while San Francisco prides itself on having a thriving Chinatown, Vladivostok is home to a thriving Chinese criminal community.

The damage these criminal gangs do to the region’s economy is enormous, yet, according to a 2007 study conducted by the Vladivostok Center on Organized Crime: “Political and academic circles in Moscow believe that the “problem” is exaggerated and warn those who write about the Chinese Mafia in Russia that this topic might harm relations with China.”

In March 2007, the mayor of Vladivostok, Vladimir Nikolayev, a supporter of the pro-Kremlin United Russia party, was removed from office after the city’s Leninsky District court approved a motion from the prosecutor’s office to strip him of his post. Nikolayev, also known by his criminal underground name of “Winnie the Pooh,” was charged with illegal land deals and embezzlement.

Five other criminal investigations of high level municipal officials, including the deputy mayor, were opened at this time but apparently were dropped. The funds allegedly embezzled by Nikolayev and his accomplices topped $3 million. Prosecutors have linked Nikolayev to Chinese organized crime gangs operating in the city which are suspected of bribing the former mayor. (International Herald Tribune, 1 March 2007)

Such Chinese crime groups as The Wolves, The Snakes and The Mad Dog have made heavy investments not only in the above listed activities, but also in local tourism and fishing as well as extorting protection money from both Chinese and Russian businesses in the city.

In 2006 a number of highly placed customs officials, Federal Security Service (FSB) and Ministry of Internal Affairs (MVD) officers, along with local prosecutors were fired during a crackdown on illegal food smuggling from China. One such smuggling operation involved a shipment of food products filling 150 railway carriages. The leaders of the gang were Chinese triad members and Russian businessmen according to Vladimir Ovchinsky, a retired MVD Major General and former head of the Russian Interpol office.

A great deal of Chinese organized crime activities involves natural resources. According to the Far Eastern Economic Review of May, 30, 2002, “Chinese and Russian groups illegally fell 1.5 million cubic meters of timber a year worth some $300 million, the WWF says. Much of it ends up in China and South Korea.”

Parameters of U.S. Military Assistance to Georgia Emerge from Congressional Hearings

by Alexander Melikishvili

The testimonies and comments by senior U.S. diplomats and military officials during the three recently held congressional hearings flashed out the parameters of the military assistance that Washington is willing to provide to Tbilisi at this point and in the foreseeable future. On Tuesday, July 28, the Subcommittee on Europe of the U.S. House of Representatives Committee on Foreign Affairs held the hearing entitled "The Reset Button Has Been Pushed: Kicking Off a New Era in U.S.-Russian Relations," which featured two testimonies by Philip H. Gordon, Assistant Secretary of State for European and Eurasian Affairs and Celeste A. Wallander, Deputy Assistant Secretary of Defense for Russia, Ukraine, and Eurasia Policy. On Thursday, July 30, the House Armed Services Committee held the hearing "The U.S. Security Relationship with Russia and its Impact on Transatlantic Security," which, apart from Philip Gordon's, included the testimonies of Assistant Secretary of Defense for International Security Affairs, Alexander Vershbow and Director for Strategic Plans and Policy of the Joint Chiefs of Staff, Vice Admiral James A. Winnefeld. Finally, on Tuesday, August 4, the Subcommittee on European Affairs of the U.S. Senate Committee on Foreign Relations held the hearing "Georgia: One Year After The August War," which featured three testimonies, including those of Philip Gordon and Alexander Vershbow as well as the one by S.Ken Yamashita, Acting Assistant Administrator of the Bureau for Europe and Eurasia at the U.S. Agency for International Development.

It should be noted that the tone of the overall remarks regarding the thorny topic of the U.S. military assistance to Georgia was initially set by the National Security Adviser to the Vice President Tony Blinken, who, during the press briefing on the eve of Vice President Joe Biden's trip to Georgia and Ukraine, specifically noted that the focus of U.S. work with Georgia in the area of defense reform and defense modernization is "on doctrine, on education and on training, and preparing for Georgia's future deployments to Afghanistan." This was later echoed in Celeste Wallander's remarks on July 28 during the congressional hearings, when she was asked by the Representative William Delahunt (Democrat, Massachusetts), who opposes the weapons transfers to Georgia. Wallander responded that the U.S. government "supports a responsible and robust defense cooperation program with Georgia that is focused on improving Georgia's [military] education, training, command capabilities and building NCO [non-commissioned officers] corps." More importantly, Wallander explained why the United States would not supply defensive weapons to Georgia at this point, when she stated:

“But Georgia is not ready for the kind of weapons acquisitions that the President [Saakashvili] floated. In the future, that’s not off the table, but certainly the United States is not in the position of believing that Georgia is ready for that kind of defense acquisition."

Far richer in detail were the remarks by Alexander Vershbow at the senate hearing this week dedicated to the approaching one year anniversary of the August war. Vershbow, who co-chairs the Security Working Group* of the U.S.-Georgia Strategic Partnership Commission with Philip Gordon, pointed out that "the United States has not provided lethal military assistance to Georgia since last August." According to Vershbow, the program of U.S.-Georgian defense cooperation entails a phased approach developed on the basis of the comprehensive assessment of Georgia's defense needs carried out by the United States European Command (E.U.C.O.M.). As Vershbow explained, the E.U.C.O.M. assessment "found defense institutions, strategy, doctrine and professional military education in Georgia to be somewhat deficient." Vershbow stated:

"As Georgia moves forward, it recognizes the need for careful and rational defense transformation plan reflecting a long-term approach and strategic patience. This has been a major theme in our defense consultations in working groups since last August and our defense assistance has reflected this reality. As I mentioned, our current focus is on institutions, doctrine, education and training and preparing for Georgia's future deployments to Afghanistan. At the same time the United States does believe that any sovereign state has the right to legitimate territorial defense capabilities and Georgia is no exception."

Perhaps the most revealing was the exchange during the questions-and-answers session when Republican Senator from Tennessee Jim DeMint pressed both Vershbow and Gordon to explain in more details the U.S. government's position on providing defensive weapons to Georgia. Senator DeMint asked Vershbow if there were any policy or national security interests that were preventing the Obama administration from supporting Tbilisi's requests for defensive weapons to which he replied:

"We have not refused any requests, but we have tried to work with the Georgians, starting in the immediate weeks after the conflict, to come up with the sensible, phased strategy for helping them to improve their defense capacities and to begin to modernize along the Euro-Atlantic lines, recognizing that there is no military solution to the problem of the separatist regions and that Georgia needs to take a long-term approach, reflecting strategic restraints, strategic patience. So we feel that the way to go, and the Georgians have accepted this based on the E.U.C.O.M. assessment to which I referred in my remarks, we should begin with the things like personnel reforms, improving their military education, professional standards of their military, helping them to rewrite their doctrine, to come up with a general defense plan, and draft a more coherent national military strategy. And this can provide a foundation for modernization of their capabilities over time. Our priority in the short-term therefore is on these professionalization and training programs. But as their capacity to absorb equipment improves based on this preparation, other forms of assistance can take place. Nothing is off the table, but we believe a phased approach is the way to go and I think we have a general understanding in the Georgian government in this regard."

So it appears that mindful of how sensitive this topic is for the Russian government, the Obama administration decided to pursue a rather delicate balancing act, wherein on the one hand Washington is trying to maintain the "reset" momentum with Russia, but on the other it is gradually implementing the phased defense cooperation with Georgia. Based upon this information it appears that the Pentagon's timeline with regard to Georgia is predicated on postponing the transfer of much-needed anti-tank and anti-aircraft weapons as much as possible in order not to incur Moscow's ire, which may manifest itself in the annulment of the recently signed transit agreement that is indispensable for supplying U.S.-led coalition troops in Afghanistan with manpower and materiel across the Russian territory. However, given the reality on the ground in the Caucasus, by the time the Pentagon does finally decide to shift focus of its assistance to Georgia from military "software" to "hardware," it maybe too late as Georgian statehood can simply collapse under the relentless military pressure and constant provocations from the separatist territories and Russia proper.

*NOTE: The U.S.-Georgia Strategic Partnership Commission was set up in accordance with the United States-Georgia Charter on Strategic Partnership signed on January 9, 2009.

**NOTE: According to Alexander Vershbow's testimony on August 4, the first meeting of the Security Working Group was held on June 22 and the next round of bilateral defense consultations is planned this fall in Georgia.

What was the Iranian Delegation doing in Abkhazia?

Sergei Bagapsh

by Giorgi Kvelashvili

On July 16, 2009, Sergei Bagapsh, the leader of the separatist government in Georgia’s Abkhazia region, currently under Russian occupation, gave an interview to the Moscow radio station Ekho Moskvy.

During the interview he addressed issues ranging from the possibility that Abkhazia, in the future, might become part of Russia through a “referendum of the people” to the supposed international relations his regime has been conducting recently.

Mr. Bagapsh boasted that he is “conducting serious talks with serious states” and to prove his point told Ekho Moskvy that “a few days ago we hosted a serious delegation from Iran, and it seems that we will have economic cooperation with Iran in the future.” He was careful to dismiss the possibility that in order “to avoid complications’ Iran would recognize Abkhazia as an independent state, but stressed that “we will be ready to develop contacts, economic, cultural and human-to-human relations” with Iran.

It is hard to imagine that the Iranian delegation visited Sukhumi without Russian consent since the only access into Abkhazia is through Russian territory. The official website of the “President of Abkhazia”, which usually posts every development in and around Abkhazia, has not posted any information about the Iranian delegation’s visit.

It is difficult to speculate about the purpose of the visit that apparently took place from July 11 to July 14. According to Russian news agencies Rosbalt and Apsnypress, the Iranian delegation was comprised of “experts on the Caucasus” held “talks with the Abkhaz authorities” that were closed to journalists “at the request of the Iranian delegation.” (Apsnypress, July 13, 2009). The delegation whose composition remains secret visited different parts of Abkhazia. According to Rosbalt, “Iran is currently engaged in establishing relations with Abkhazia and South Ossetia.”

Such secrecy could be explained by at least two factors. First, Iran has never questioned Georgia’s sovereignty and territorial integrity and although it has close ties with Russia, Tehran has not joined Moscow in recognizing Abkhazia’s and South Ossetia’s independence.

Second, besides the historical sites and lovely natural landmarks the Russian news agencies claim the Iranian delegation visited, Abkhazia is home to several Soviet-era nuclear facilities, most importantly the Vekua Institute of Physics and Technology (SIPT) in Sukhumi, which remains outside Georgia’s effective control and according to some sources is still operational. Georgia has long requested that appropriate international bodies conduct a comprehensive inventory of the Sukhumi facilities.

Whatever the reason for the highly secretive visit of the Iranian delegation to Abkhazia, the Georgian government might seek clarification from Iran on the purpose of the visit, if it has not already done so. Likewise, the United States and Turkey are likely to take a closer look at Iranian activity in Abkhazia.

Eurasian Energy Briefs

By Roman Kupchinsky

Germany appears to be on the path to greater diversification of it natural gas suppliers.

On July 15, RWE signed an agreement with Turkmenistan which outlines conditions for the development of gas deposits in a section of Turkmenistan’s part of the Caspian shelf. According to the Warsaw-based Center for Eastern Studies, the agreement improved Germany’s chances of becoming the leading player in the export of Turkmen gas to the West as part of the Nabucco pipeline consortium.

Since the start of the still unresolved gas conflict with Russia in April 2009, “Ashgabat has been increasingly courageous in seeking closer co-operation with the West – for example, it has openly declared support for the projected Nabucco gas pipeline. Signing an agreement with Germany’s RWE while the gas conflict with Russia is ongoing is a way for Turkmenistan to strengthen its position in the gas negotiations with Gazprom concerning the terms on which the exports of Turkmen gas could be resumed.”

The European Commission along with international financial institutions agreed to extend Naftohaz Ukraine, the state-owned oil and gas monopoly, $1.7 billion in credits. Participating will be the European Bank for Reconstruction and Development ($750 million), the European Investment Bank ($450 million) and the World Bank $500 million).

The Commission had demanded a restructuring of the Ukrainian gas sector before extending any credits and apparently the Ukrainian government’s decision to raise domestic gas prices in September-October this year satisfied the banks.

Kommersant wrote that the Ukrainian government had asked for $4.2 billion, but this was rejected. Moreover, Naftohaz will only receive $300 in 2009, a sum which will hardly make a dent in improving the monopoly’s dire financial problems.

Exxon and Gazprom seem to be on a collision course. The Russian government is now demanding that Exxon divert gas from the Sakhalin-1 project to Russian domestic consumption in the Khabarovsk region and is mounting pressure on the U.S. company to drop plans to export gas to China.
"Given that nearly all the gas from the Sakhalin-2 project has already been sold under long-term contracts and other Sakhalin projects are not expected to start production in the medium term, the gas from Sakhalin-1 can be the only source for domestic supplies until at least 2015," said Vladimir Kozlov, head of Gazprom's Sakhalin office.

This is not an unexpected development. Western and Russian analysts have been predicting for years that Russia would use gas from Sakhalin island for domestic needs.

Speaking at the annual oil and gas conference in the island's capital of Yuzhno-Sakhalinsk, Vladimir Kozlov, the head of Gazprom’s Sakhalin office, said the growing demand for gas in Russia's four far eastern regions would reach 13 billion cubic meters by 2010 and further grow to 16 bcm and 19 bcm by 2015 and 2020, respectively.

This development will most likely strain Russian-Chinese relations and further scare Western investors from entering the Russian gas market.

Russian MVD Colonel Slams Gazprom

by Roman Kupchinsky

Russian police Colonel Oleg Mansurov worked for the Ministry of Internal Affairs (MVD) for 28 years. He was a graduate of the MVD Academy, and had been assigned to the headquarters of the ministry since 2001 where he worked at the Main Directorate combating serious economic crimes as a senior investigator.

On July 31, Mansurov shared with the Russian internet publication, Novaya Gazeta, a sensational letter he had sent to Prime Minister Vladimir Putin.

Mansurov claimed that in February 2003, when he worked in the Department of Criminal Investigation of the energy and power sectors, he conducted an investigation into the legality of a contract signed between Gazprom and a Hungarian company, Eural Trans Gas (ETG). The company had been linked in the media to Semyon Mogilevich, a Russian mobster, wanted by the FBI for fraud and money laundering.

Mansurov writes that in April 2003 he participated in a meeting of officials from the MVD Main Directorate for Combating Organized Crime with U.S. FBI agents who informed their Russian colleagues that Semyon Mogilevich was indicted for fraud and money laundering and was on their most wanted list.

During the meeting Mansurov asked the FBI to provide any information they might have about Mogilevich.

“That same day” Mansurov wrote Putin, “I was summoned by one of the deputy heads of the department and was told to end all investigations [about Mogilevich] and turn over to him all my reports relating to his case.

Mansurov wrote that he complied with the order and turned over his Mogilevich case file to a different unit where the investigation was discontinued.

On July 1, 2003 the colonel was told that he must leave his unit due to a reduction of staff, but could ask for a transfer to a different department. On June 5, 2008 he was fired.

Mansurov took his case to a court which ruled in his favor and ordered that he be reinstated in his job, but the court order was ignored by the MVD.

“I believe that this persecution is due to my initiative in investigating the legality of the Gazprom (ETG) deal. Had they allowed me to conclude my investigation, then we would have rejected the use of intermediary companies as far back as 2003 and possibly the New Year’s gas conflict (with Ukraine) would not have taken place and Gazprom’s, as well as Russia’s reputation would not have suffered” Mansurov wrote.