Wednesday, September 3, 2008

Georgia on my mind

In recent days, we’ve stopped hearing much, if anything about the pseudowar in Georgia. Before Juno MacGuff became center of the media universe, the news seemed to be talking about diplomacy, official actions and reactions of national governments, and troop movements. In the dozen or so articles I’ve read in various publications since the conflict escalated a month ago, I’ve seen little discussion of the petroleum industry and virtually no mention of the Russian state-owned gas company Gazprom or the several oil and gas pipeline segments that cross Georgia. This has gotten a little better recently.
For readers unfamiliar with this contentious little piece of the world, Azerbaijan and the former Soviet republic of Georgia happen to be situated in such a way as to allow for the transport of oil and gas from the productive Caspian Sea region to the Black Sea, a major transportation hub to Europe and a petroleum source in its own right. For those who don’t know Caucasian geography nor have a map in front of them, this corridor snubs Russia and its massive gas industry that supplies much of Europe. (A primer on energy in the Causasus region, if you're so inclined)
With this in mind, I put some questions to the reader:
Why is Russia supporting the break-up of Georgia? Is Russian support for the break up of Georgia at all similar to the US overthrow of Saddam Hussein? Is Russian support for an independent South Ossetia materially different from US support for a semi-autonomous Kurdestan? Would anyone care what was going on in Georgia or Iraq, if these countries’ major industries were fruits, nuts, hand-woven rugs, and wool?

Image source: CIA World Factbook

11 comments:

Pat Jenkins said...

remind me again erd how much oil us americans have confiscated from iraq?

E. R. Dunhill said...

PJ,
The US does not loot oil from Iraq. Do you believe that this means petroleum wasn't a motivator for invasion or for continued war?
What do you feel are Russia's reasons for deployment in Georgia and for their official recognition of South Ossetia?

Chris Crawford said...

I think that the real purpose of the Russian actions in Georgia was to re-assert the Russian sphere of influence in their "near abroad". They wanted to establish that 1) Russia WILL use military force to support its policies in countries adjoining it; and 2) The West will NOT intervene to protect those countries. Their action in Georgia drives these points home quite powerfully.

Chris McClure aka Panhandle Poet said...

What good are treaties of alliance when we don't support our allies? I suppose the wording of our treaty with Georgia might not include military assistance....

It reminds me of Czechoslavakia....

I think it's all about Russia saying, "this is our sphere of influence, U.S. stay out."

Pat Jenkins said...

well if we haven't taken a drop erd, would it not be suffice to say our excursion into iraq was not about oil?.. and i would very much agree a part of russia's invasion was aimed at resources, but i see no correlation with our actions in iraq.

E. R. Dunhill said...

PJ,
Using that logic, we can also conclude that we didn't invade Iraq in search of weapons of mass distruction, nor because of a link between the Iraqi government and Al Qaeda. Neither of these panned-out any better than the promise that oil revenues would finance reconstruction.
Is it a coincidence that a massive, open-ended, no-bid contract to provide everything from infrastructure to mail service to laundry was given to Haliburton, an oil field service firm?
Whether or not oil was a factor in the US invasion of Iraq is not in question. The degree to which it was a factor doesn't really bear upon this post.

Pat Jenkins said...

did you not infer erd that the two invasions not were similar in your questions?.. now YOUR logic may have some substance if we did invade iraq on the premise of weapons of mass destruction and then make off with their oil. but by your own admission this isn't happening, so that argument holds no water!!

E. R. Dunhill said...

PJ,
The logic is fine. You asserted that since the US has not stolen oil from Iraq, that the invasion was not related to oil. I pointed out that if we apply your logical test to weapons of mass destruction, we would conclude that these weapons were not our motivation, because the US didn't recover those weapons either.
Your objection over the idea that oil was a motivator for the invasion of Iraq seems to be predicated on the idea that the only way to make money in the oil business is to own and sell oil. While it is indeed possible to become fabulously wealthy this way, there are lots of other ways to make heaps of money. For instance, an oilfield services firm like Haliburton is not (at least primarily) in the business of leasing mineral rights and selling oil. Rather, they provide services at and around the well-site. Two of their three largest contracts in Iraq are to provide such services; these contract values are well-into the billions of dollars.
I also want to be clear that I don't believe oil was the only motivator for invasion. Saddam Hussein was a mass-murderer and a megalomaniac. He seemed like someone who would love to have weapons of mass destruction again. However, he was also sitting on top of 115 billion bbl of proved reserves (that's a lot, even in the oil business), and was producing relatively little. With a new government that's less antagonistic to the West, the firms that explore and produce oil and gas have some very lucrative business opportunities that couldn't exist under Hussein.

Chris McClure aka Panhandle Poet said...

ERD: You imply in your reply to PJ that Dick Cheney was behind the invasion of Iraq (I'm jumping to conclusions here) due to his imvolvement with Haliburton. I seriously doubt that had anything to do with the decision.

Haliburton is the only logical choice of oilfield service companies in the world to rehabilitate the Iraqi oil industry. They are the only one with the scale and resources for such a difficult and decidedly dangerous job. Additional service contracts would naturally flow to them once they were in place in Iraq due to the security and logistical issues that they had already resolved.

Just because there appears to be a logical linkage between the administration and Haliburton post-invasion does not make it a reason for the invasion.

I certainly agree that oil was an issue in the decision process. I also accept the administration's evaluation that there were likely WMD's remaining under Hussein's control (based on best intelligence estimates pre-invasion). I also believe the administration was convinced of ties between Hussein (or his intelligence infrastructure) and al Qaeda. When you add to those factors the repressive, dangerous, potentially aggressive nature of the regime, it was an appropriate move.

The oil is not just in Iraq. It is in neighboring countries that were threatened by Hussein. The short-term instability of the region replaced a greater long-term threat. It also created the potential of the seed for democracy to grow in a region known for repressive totalitarian regimes. One of the greatest exports of our nation is the combination of capitalism and democracy.

E. R. Dunhill said...

Chris M,
My point is not that some grand military-industrial conspiracy engineered war in Iraq. My point is that there was a huge financial incentive for overthrowing Hussein and a huge financial risk associated with his continued rule. Pretending that these factors never crossed anyone's minds as good reasons to invade is silly. Iraq's oil money was on the administration's mind from the beginning.
Wolfowitz said as much in his Congressional testimony in March of 2003. A few weeks later, Cheney predicted that Iraqi oil production would reach 3 million bbl/day within a year, even though Iraq's production at the outset of the war was less than 2.4 milion bbl/day. Iraq lacked the resources to reconstruct (let alone substantially and quickly grow) its petroleum industry on its own. The administration had to have planned on bringing in US firms from the beginning. Are our elected officials too high-minded to be influenced by money?
I agree that one of the US' greatest exports is democracy. As for capitalism, I don't think an open-ended, sole-source, no-bid, multi-billion dollar contract for everything from oilfield services, to water treatment, to laundry services constitutes capitalism.
Whatever our original reasons, we're now stuck fixing the mess.
With respect to the original point of the post, I agree with you and Chris C that Moscow is feeling nostalgic and that this is a major factor in the invasion. However, I don't think Georgia's strategic signficance in the oil and gas industry and its years of angst with the Russian state-owned gas company Gazprom can be discounted.

Sue said...

William Clark author of Petrodollar Warfare - Oil, Iraq and the Future of the Dollar (New Society publishers) articulates an argument that I've seen others make as well, that one inportant motivation to go to war with Iraq had to do with protecting the value of the American dollar, which depends heavily upon being THE currency for purchasing oil --hence the term "petro-dollar." In 2000Hussein insisted that Iraq's oil be sold for euros not dollars, a political move, but one that improved Iraq's earnings thanks to the rise in the value of the euro against the dollar. It also contributed to the decline in the value of the dollar. Other oil rich countries were contemplating following Hussein's lead, which could have been devastating to the value of the dollar.