To read the media summaries of the
accomplishments of the G8 meeting in Japan early this
week you'd think not much happened. Several things of
critical importance did happen, however. DTT has been
reporting since last year that the Caspian oil is the
critical factor in determining Russia's future.
During the corrupt Yeltsin years, the November issue
of DTT Digest reported that money invested either by
Western businesses or the World Bank/IMF was
squandered by the oligarchs, often put into private
Swiss accounts or diverted by the FSB (the former KGB)
into military weapons development. Since this spring
Russia and the United States have been vying for
dominance over the Central Asian and Southern Caucasus
republics of Azerbaijan-Georgia of the former Soviet
Union. DTT NewsBytes reported on May 1 that the U.S.
and Europe lost this bid to control the Central Asian
nations to Russia, although Azerbaijan and Georgia are
still up in the air. On May 5 DTT NewBytes reported
the U.S. and NATO lost a bid to control Ukraine, again
to Russia.
Russia paid a steep price for
denying the West free access to Caspian oil. Russian
President Vladimir Putin wants to continue to rebuild
the Russian military and become a world trading
partner. But its manufacturing facilities, especially
in oil, are outdated and wearing out. Russia must have
a capital infusion. On Wednesday, July 26 it was reported that
Putin came to the G8 meeting to ask for debt
forgiveness and a vote of investment confidence from
the other G7 members. Instead, he came away with a
warning about money laundering. Russia’s economic
reforms could fail under the crushing weight of debt
repayments – 30 to 40 percent of Russia’s budget
revenues. Not only did the West refuse to forgive the
debt, it also refused to even consider restructuring
the debt. Putin's entire reform strategy depends upon
substantial foreign investment and he failed to get
it. Putin has clearly shown the West he is making every
effort to clean up the corruption that destroyed
investments made during the Yeltsin era. He has
recently arrested for graft and corruption a number of
the oligarchs responsible for the corruption,
including the head of Gasprom, the monolithic Russian
oil firm that has skimmed off profits of Russia's
existing oil pipeline system while allowing the system
to fall apart. But now the oligarchs are fighting
back, along with the Regional Governors who just lost
power in a massive reorganization by Putin to keep
Russia from disintegrating. However, with some illegal
help of his old organization, the FSB (KGB), Putin can
likely keep these factions under control.
Putin has two options. He can take
the long, unsure approach of very slowly recovering
from the economic disaster created by Yeltsin, or he
can quickly take Azerbaijan and Georgia by force. In
the first approach, Putin risks losing power over the
Central Asian Countries that he has just secured, and
will likely lose any influence over Azerbaijan and
Georgia, where most future oil pipelines must be
built. Russia will lose hundreds of billions of
dollars and become a poor country cousin in the
emerging world government. The recent war games with
Belarus and their direct threat to NATO strongly
suggests that this approach offers a gamble Putin is
unwilling to take.
Hence, the second approach may be a
more likely option. In it Putin uses the new, albeit
limited, weaponry Russia has just manufactured to
launch a lightening attack against Azerbaijan and
Georgia. By directly controlling these two republics,
not only does Russia control the Azerbaijan oil
reserves, but it also indirectly controls the oil east
of the Caspian Sea in Central Asia.
This approach, however, carries the
risk of involving the U.S. and NATO in defending the
two republics–unless some kind of arrangement was
made in the mid-May agreements that were reached
between Russia and China and the U.S. and Europe. DTT
believes there is strong evidence that some kind of
agreement was reached around May 19 that guaranteed
the right of China and Russia to have sovereignty over
its internal affairs and be a player in the emerging
new world order. It is not certain, however, if this
agreement permits Russia to take Azerbaijan and
Georgia without NATO intervention.
If not, it almost seems that the G8
inflexibility is forcing Russia to take a military
course of action that may draw in NATO and the US.
Time will tell. V
