Caucasus Geopolitics Shake Up the Energy Game
Over the past few months and in the midst of the Ukraine crisis, a shift of great geopolitical and energy importance is taking place in the Caucasus region. In particular, an alignment between Moscow and Baku, should it be fruitful, might shake up the entire gas route plans of the West with plans for a Russo-Turkish, alignment - Turk/Turkish Stream.
Azerbaijan's President Ilham Aliyev is anticipating a 'colour revolution' in the country. His right hand man, Ramiz Mehdiyev, Head of the Presidential Administration, recently published a 60-page widely circulated manifest accusing the US that it is forming a "fifth column" in the country. Mehdiyev explains that the role of NGOs is to overthrow current political establishments and concludes that a strong Azeri Presidency is required. Moreover, he adds that Washington is the major culprit behind instability in international relations and called for an independent and balanced foreign policy for Baku. The manifest was written in Russian and was also widely read in Moscow as well.
Furthermore, in mid-December 2014, the premises of Radio Free Europe in Baku were raided by Azeri security forces who seized equipment and files. The station is subsidized by US state department and various quasi-official American agencies. Washington condemned the event and the arrests of several other independent and oppositional journalists in the country. Around 100 opposition figures were arrested in 2014, the vast majority of which are somehow related to American media or the government. Meanwhile, pro-Aliyev state-owned media frequently debates negatively the US role in international affairs.
Azerbaijan plays a key role in supplying oil and gas to the Republic of Georgia, who would otherwise be totally under Russian energy influence. More importantly, the Trans Anatolian Natural Gas Pipeline (TANAP) and its spur, the Trans Adriatic Pipeline (TAP) constitute the Southern Gas Corridor route, which the US is confident will play a significant role into the diversifying the Europe's gas supplies and decrease the Continent's dependence on Gazprom.
Nevertheless, feasibility is an issue due to the fact that the Corridor was meant to be the first stage of the introduction of Central Asian gas through the Caucasus into Turkey-EU via the Trans-Caspian pipeline. Due to effective opposition by Russia, China, Kazakhstan and Iran, this project will be extremely difficult to materialize.
Under these circumstances, Azerbaijan realizes that its energy importance for the West is not as great as presumed. On the other hand, the spread of Western know-how and influence leads to strong calls for multi-party democratic institutions that will erode Aliyev's family establishment, hence the anti-US rhetoric.
Concurrently, Baku is entrenched for decades in a cold war with Armenia, a staunch ally of Russia, whilst it relations with Iran can be summarized as lukewarm in the best of cases. Thus, it needs actual and pragmatic Russian guarantees for its own territorial integrity, taking into account that the geopolitical placement of the country gravitates to isolation from any meaningful assistance by the 'Naval powers' in geopolitical terms.
For the above reasons it agreed into procuring arms from Russia worth $1 billion, whilst security services of both countries have started boosting their cooperation. Economic relations are also improving and alignment between the two has been achieved, somewhat. The aforementioned developments happen during a time when careful, behind the scenes negotiations are happening between Russia and Georgia. The latter seeing its so-called 'Eurasian political elite' gaining considerable ground against the 'Western-leaning' one. In short, the geopolitical landscape in the Caucasus is seriously tilting in favor of Moscow and in parallel with the addition of the Turk Stream that will shift the natural gas hub of the EU to Turkey, supplied mostly with Gazprom's supplies.
Continuing to Greece, there has been a change of governmental guards, with the win of the SYRIZA leftist party in the early nationwide elections on 25 January. This plays an additional role since already this party has agreed to proceed with the introduction of a spur for the Turk Stream, based on the previous plans of the Interconnector-Greece-Italy (ITGI). Moreover, SYRIZA tends to favor in general a balanced approach based on cordial relations between Russia and the US - with a diminished German-EU role. There is a considerably softer stance concerning Turkey's role in geo-energy affairs of the region, which simply implies that projects such as the East Med Pipeline from Israel to Greece will be lowest on the priority scale.
Lastly, a leading SYRIZA advisor and senior governmental figure commented exclusively to Natural Gas Europe :
Our future government will follow a pragmatic stance in international affairs and the energy ones, based on the needs of the people and the national interests, which dictate that a multi-dimensional policy is needed without constraining or embargoing relations with any state that can provide Greece with benefits, energy security included.
It should be noted though that a spur of Turk Stream into Greece is far from certain since the most economical route would be the one through the Balkans and into Austria/Italy large gas hubs, where originally South Stream was about to end. Thus a 'pragmatic' stance by a future SYRIZA government may indeed mean that it will follow a strategy based on LNG owing to the country’s favourable maritime environment and industry to offer a diversified source to the Balkans and in that sense that will follow the energy role model which is actually being implemented with the current Greek governmental coalition and which for sure is backed by Washington in most respects.
In general, the Ukrainian crisis is degenerating to a partial loss of US geo-energy influence in the wider South eastern European region. This is coupled with strong anti-Western movements in Bulgaria and Serbia, although not reported in the international press, and omission of the great difficulties into resolving Iran's perennial nuclear problem. In fact, although Iran would be the key to diversifying gas supplies to the EU, it is late for such a grand geopolitical turn, since both the Sunni Kingdoms and Israel are adamant into recognizing an emergence of an Iranian axis stretching all the way from East Mediterranean (Lebanon) to Kandahar (Afghanistan) and from the Caucasus to the oil rich Eastern Saudi regions in the Gulf. That would make Teheran the ultimate hegemon of the most important region in the world and it is mathematically impossible that the other important players would accept this without a fight.
To conclude, the Caucasus area will play a significant role in the coming period into the shaping of EU gas supplies as Russian supplies may increase rather decrease. Furthermore it can be certain that Germany, the Continent's largest economic and political power, but one lacking energy resources, will get more energetically involved in the landscape as it works to secure its own supplies. This will include further involvement of other EU powers, most notably the UK and France, who already have a great stake in the Southern Corridor and Azeri fields through BP and Total. A diplomatic spotlight for 2015 will most certainly be on Baku with Istanbul being placed as a major intermediate stop.