When the Berlin Wall fell in 1989, followed by the subsequent tumble of the Soviet Union, the world was jubilant.
Good had triumphed over evil; the West had prevailed over the East. We celebrated the new chaos and cheered our status as the only remaining superpower.
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Ask any Western leader, and he’ll tell you the Cold War is over. The problem is, somebody forgot to tell the Russians.
From the Russian standpoint, their former hegemony had little to do with promoting a communist agenda.
They Know, We Don’t
Unlike Americans, every Russian is a student of history.
For example, the French-led 1812 Napoleonic invasion of Russia, as chronicled in Leo Tolstoy’s War and Peace, is woven into the DNA of every Russian.
After the massive losses suffered at the hands of the Germans during World War II, Russians acquiesced to the aggressive brutality of Stalin and Khrushchev as means of national survival.
When the USSR disintegrated, former Soviet republics, like Georgia, sought to establish their own separate destiny and prosperity.
Impressive Growth Rate
While Georgian democracy has not been perfect, the country has experienced growth rates as high as 12 percent a year.
At the core of Georgian success has been oil. With the assistance of Western companies like British Petroleum, some of the world’s longest oil and gas pipelines pass through Georgia to the West. With its free access to the Black Sea, Georgia is a gateway through which oil from Caucasus and Caspian Sea nations, such as Turkmenistan and Azerbaijan, will find their way to Europe.
From Bankruptcy to Penthouse
After the fall of the old Soviet Union, Russia was too weak to rein in breakaway republics like Georgia. Following the stock market crash of 1998, Russia was effectively bankrupt.
But with the discovery of vast oil and gas reserves, and Vladimir Putin’s centralized control of these resources, the Russians have emerged as a new global economic power.
Today, Russia is the world’s largest producer of oil and natural gas.
Russia’s Gazprom produces 85 percent of the nation’s natural gas, controls 17 percent of the world’s reserves and is a major supplier to countries across Central Asia and Europe.
Its former chairman, Dmitry Medvedev, was elected Russia's president in March. Despite Medvedev's ascension, make no mistake, Putin still pulls the strings.
Not only have the Russians prospered wildly, but it has found itself with a new strategic weapon.
Pipelines owned and operated by Gazprom supply Germany with 43 percent of its natural gas. If the Russians cut off that flow, there is no ready substitute.
As a result, is it any surprise that the European and American response to the invasion of South Ossetia has been so limp.
On the surface, it appears that the Russian effort to encourage the secession of South Ossetia and Abkhazia is punishment for Georgia’s intent to seek NATO membership.
Nothing could be further from reality.
The real truth is that Georgia’s deals to allow Western companies to build pipelines, connecting producers in central Asia to consumers in Europe, undercuts the Russian monopoly and its ability to sell its own gas at higher prices to the Europeans.
A Bully That Is Proud
Apparently, the Russian strategy is working.
British Petroleum has indefinitely shuttered its 90,000 barrel a day Georgia oil pipeline and scrapped plans for further extensions.
Nearly 500,000 barrels of oil a day from Turkmenistan and Kazakhstan are exported through Georgia’s Black Sea ports. Because of the region’s growing instability, Western expansion of these facilities has been shelved.
Russia doesn’t really seem to care if the rest of world treats it as a bully.
Now that its economy has recovered and it has powerful oil and gas weapons to use against those who oppose it, Russia knows that it has a strong hand — and now it knows we know.
John Cohn is a senior partner at Globe West Financial Group, based on the Westside. www.globewestfinancial.com
