Russian economist expects Nabucco gas pipeline project to fail

Sat 07 Nov 2009 06:35 GMT | 10:35 Local Time

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News.Az interviews Mikhail Khazin, Russian economist and president of the Neocon consulting company.

How will the Armenian economy benefit from the opening of the Armenian-Turkish borders? What separate dividends will Armenia and Turkey gain? Is the normalization of relations between these two countries based on political or economic motives?

On the whole, the normalization of these relations is a principal issue of today’s geopolitics. It sounds like this: if the Caucasus has a strong player, he is interested in peace, interaction and the absence of external actors. Several big "external" superpowers, primarily England and the United States, are traditional actors in the Caucasus.

They backed the wars in the 1990s (and even the conflicts of the "late" USSR) and they are mongering wars today, while there are only two and a half “internal” players in the region. These are Russia, Turkey and Iran (as a half). They are really interested in creating the predicted system of internal security in the Caucasus and the maximum agreement of all participants in the political process.

As for Azerbaijan, for it the export of energy sources via Russia is no worse than in any other directions and it does not pose any threat to Europe (but it is threatening to the US with the consolidation of the “Eastern” direction of European policy)

Mikhail Khazin

Other participants (primarily, Azerbaijan, Armenia and Georgia, though the latter is ruled not by the national elite but  by a pro-American group used to raise tensions in the region) are interested in it. Armenia and Turkey have always maintained economic relations and here the normalization of political relations would also be positive.

The head of Armenia's financial-budget commission, Gagik Minasyan, said Armenia is at a critical point of economic recession and “there can be nothing worse than this”. At the peak of the economic crisis Moscow provided colossal financial assistance to Yerevan. Is it profitable for Moscow to draw its economically weak partner out of the crisis in which Armenia has been for several years already? Why does Moscow take such seemingly inexpedient steps?

I can say about the phrase “there can be nothing worse than this” that this is either a policy or misunderstanding. As for Moscow, being the second important player in the Caucasus, it is also interested in stability and is doing much for all the countries of the region. I would like to recall the money transfers home by members of the Azerbaijani diaspora living in Russia. Everything was relatively good with Georgia until Saakashvili came to power.

But it has been established historically that Armenia and Russia have closer relations, including in connection with Azerbaijan's more multi-vectoral foreign policy. I think this will have a major influence on developments. All the countries of the region have the same basic interest – normalization of the political situation and economic development.

How do you assess Azerbaijan’s economic state? Has Azerbaijan’s economy proved strong amid the financial crisis?

Azerbaijan should diversify its economy as prices for oil and demand will decline in the medium term. But now that the the price for oil is declining more slowly than for most other resources, the situation in the country will be more or less stable. Anyway, it is important for Azerbaijan, as for any small state, to look to the future as reasonably as possible and not to yield to provocations.

What economic goals is Russia pursuing in the normalization of Turkish-Armenian relations? What are Armenia’s losses resulting from its isolation by Turkey and Azerbaijan?

It is difficult to speak of the economy now, as it is hard to separate political losses (isolation) from economic (crisis). As I have already said, political stability in the region and driving out external powers that threaten political stability is a key element for Russia today.

Why is Europe accelerating the normalization of Armenian-Turkish relations, forgetting that winter is coming and it should not worsen ties with Azerbaijan which can now sell its energy sources via Russia? Europe is again making itself dependent on Russia, though they have lately attempted to get rid of this dependence.

Europe has its own problems. It has its "principles" (mostly imposed within the framework of the Atlantic unity with the United States and the Eastern European countries after they joined the EU) and includes the interests of specific countries (for example, France and Germany). Today, their debates have become common (for example, on construction of gas pipelines "bypassing" [Russia], though it is unclear how Nabucco differs economically from North Stream, the difference is only in geopolitics), which means that the EU is starting to undertake debatable issues.

England and the United States, are traditional actors in the Caucasus. They backed the wars in the 1990s

Mikhail Khazin

As for Azerbaijan, for it the export of energy sources via Russia is no worse than in any other direction and does not pose any threat to Europe, but it is threatening to the US with the consolidation of the “Eastern” direction in European policy. I implied these things, when I wrote in my previous responses that political provocations should be ignored.

Some analysts say that the signing of the protocols has significantly cooled the strategic and partnership relations between Turkey and Azerbaijan. And the first result was that Azerbaijani President Ilham Aliyev said Baku had failed to agree on Azerbaijani gas transit with Ankara. And now Azerbaijan views Russia as one of the alternative routes for Azerbaijani gas transit. Thus, the Nabucco pipeline is losing its importance, giving way to South Stream initiated by Moscow. Don’t you think that the Kremlin is interested in cooling relations between Turkey and Azerbaijan to bury Nabucco and push Europe into implementing the South Stream project?

Certainly, Russia does not need Nabucco. Perhaps, it is economically profitable for Turkey but it is politically a headache as it concerns Turkish policy towards America's line in Europe, while the United States has failed to execute their main duty – to persuade the EU to admit Turkey.

Considering the developing crisis that will most likely destroy the system of "Atlantic unity" (though not at once), Turkey needs to change its policy, and it is gradually doing this, and to strengthen the northern (Russia), eastern (Iran) and southern (Islam) components. And I do not rule out that agreements with Russia may compensate purely financially for the absence of Nabucco, while agreements on Karabakh, which will probably be implemented after the main geopolitical schemes in the region are established, will become serious compensation for Azerbaijan.

But the most important thing here is the construction of the Caucasus market, as external markets will be restricted for all countries, especially energy exporters, because of the global economic crisis.





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