The Moscow Connection
The Moscow Connection


by Julia Hakobyan

In early January, gas supplies from Russia to Georgia and on to Armenia were cut off by mysterious explosions that destroyed a section of pipeline. Gas for Georgia was diverted from Azerbaijan, while Armenia was forced to live off reserves from its 90 million cubic meter reservoir for nine days. Georgia’s President Mikhail Saakashvili blamed the Russians for the crisis, calling the explosions an act of terror. An investigation later concluded that the pipes had burst due to mechanical malfunction.

The disruption of service was a graphic reminder of Armenia’s reliance on Russia for its security and comfort. Last year, Armenia imported 1.685 billion cubic meters via the Russia-Georgia vein, an increase of 26 percent over 2004.

The explosion also heated the existing debate over impending gas hikes from the source—a controversy that could chill otherwise cozy relations between Russia and Armenia, depending on what the former “mother” state finally decides regarding tariffs for its supply of natural gas.

As the winter demonstrated in the controversial and bitter disputes over price increases in Georgia and Ukraine, pipeline politics are an explosive issue in post-soviet relations among former comrades.

Last fall it was announced that Armenia would be charged more than twice as much for gas supplies beginning January 1, when Russia declared that it would no longer offer the fuel at a discount to its former satellite states.

Armenian negotiators managed to secure a delay in the increase until April 1—after the winter—but were unsuccessful so far in their attempts to persuade Russia to reduce the price of $110 per thousand cubic feet, nearly double the $56 now being paid.

Russia’s state-controlled Gazprom company has already imposed price increases in Ukraine and Georgia, where both countries have accused Moscow of “punishing” them for their political leanings towards Washington DC and the European Union.

Armenia’s relations with Russia have been the friendliest among Caucasus nations. But, even as ceremonies were taking place in Moscow to inaugurate the “Year of Armenia” in Russia in late January, rumbles of discontent were evident in Yerevan. When it comes to the supply of gas, it seems that the Great Protector has fully embraced capitalism at the expense of “family”.

Still, while officials warn that drastic increases are coming, a recent poll showed that only one in five citizens of Armenia really believes that Mother Russia will impose the stated increases on Armenia as it has in other customer-nations.

When the Solution Center for Public Reforms polled 1,000 Armenians this winter, only 200 said the gas price would be doubled.

While the majority of Armenians continue to favor closer ties with Russia (home of the largest Diaspora population), and, as the poll showed, still find it hard to believe that they would suffer at the hands of Moscow, 75 percent said that their sense of loyalty to the giant neighbor would lessen if gas prices were raised. Sixty percent agreed that, if the increase took effect, Armenia should revise its relations with Russia.

The citizens’ attitudes are echoed by many Armenian politicians. Prime Minister Andranik Margarian, in an interview on the Armenian TV channel “Kentron”, said that if Russia raised the price of gas unilaterally then the idea of “strategic partnership” in Armenia-Russia relations would have to be reviewed.

“We must make clear what is meant by ‘strategic partner’ and what spheres it concerns,” said Margarian.

Khosrov Harutyunian, the former Speaker of the Armenian Parliament, told a news conference that Armenia should not only revise its relations with Russia but also review the conditions under which Moscow maintains military bases in the country. “What Russia is doing contradicts existing agreements and relations between our countries,” said Harutyunian, the chairman of the Christian Democratic Union.

“If Russia wants to have its military bases in our country, it should supply gas to Armenia at the existing price. Russia should understand that military bases have their cost. Armenia has a right to demand from Russia more than any other country,” he added.

Some political experts disagree. Analyst Yervand Bozoyan, director of the “Herankar” (Perspective) Non Governmental Organization, says that Russia could not propose new higher tariffs for Georgia and keep the existing prices for Armenia.

“Russia wants to keep parity between countries and does not wish its gas policy to lead to political conflict. Any privilege granted to Armenia could have a negative impact on Georgian-Armenian relations, which in its turn would have another negative consequence, taking into account the fact that Georgia is a gas transit country for Armenia,” Bozoyan told AGBU. Bozoyan suggests instead that, since Russia considers Armenia to be its strategic partner (unlike Georgia), it should “really think about compensation”.

Sergey Ivanov, the Russian Vice Prime-Minister and Minister of Defense, refused to comment on the gas issue when he visited Yerevan in late January (after a visit to Baku), saying instead that Russia is a market-oriented country and should follow those principles.

At a joint press-conference, Armenia’s Minister of Defense, Serge Sargsian, said that there was no need to link the gas issue with the question of the presence of Russian military bases in Armenia. He described as untimely conclusions that Armenia should revise its military partnership with Russia. “The Russian military bases were established in Armenia at the request of Armenia, not Russia” the minister underlined.

In early February, President Robert Kocharian’s administration refuted information published in the Russian newspaper Kommersant which claimed that Russia would keep the gas price unchanged because Armenia had agreed to hand over 45 percent of its share in the Armenia-Iran gas pipeline, currently under construction. The pipeline is due to deliver gas from Iran to Armenia in two years’ time.

“Russia is extremely interested to divvy up the new gas pipeline, because tomorrow the Iran-Armenia pipeline can be an alternative way to pump gas to Europe. Of course Armenia should not agree (on sharing its revenue) because the Iran-Armenia pipeline is a chance for Armenia to get rid of the Russian gas monopoly and to become a more economically attractive and equal partner for other countries in the region, including Russia,” Bozoyan says.

Bozoyan, like other analysts, says that the decision of the Armenian leadership to reduce the planned diameter of the pipeline to 750 millimeters was made under pressure from Russia to prevent Iranian gas being exported to other countries. “It was a serious mistake,” he says, adding however that the construction of a second pipeline for export remains a possibility.

Originally published in the April 2006 ​issue of AGBU Magazine. Archived content may appear distorted on your screen. end character

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