Caucasus Report: October 2, 2006

WHY HAS THE RUSSIA/GEORGIA SPY ROW ESCALATED? Spy rows between countries are often solved diplomatically and discreetly, outside of the media glare. But Georgia's row with Russia over four arrested intelligence officers has escalated with an intensifying war of words and threats. So why now? Was Georgia following a carefully orchestrated strategy in dealing with the alleged spies in such a public way? Or had it just lost its patience with what it calls Moscow's provocations over the frozen conflicts in South Ossetia and Abkhazia?

"In spite of the fact that Russia is consistently fulfilling all the agreements we have on removing our armed forces from the territory of the republic (Georgia), in spite of all this, as is known, our military officers were snatched and thrown in jail. This is a sign of the succession of Lavrenti Beria both inside the country and in the international arena." -- Russian President Vladimir Putin.

President Putin's reference to Josef Stalin's notorious secret police chief -- who, like Stalin, was from Georgia -- is a good reflection of how low the level of discourse between Russia and Georgia has dipped.

As is Georgia's decision to parade the alleged spies on television -- which, by most people's reckoning, is not the most sensitive form of diplomacy.

With the announcement today that Georgia would hand over the four Russian Army officers to the Organization for Security and Cooperation in Europe (OSCE), it seems that diplomacy may have prevailed. But with hawks on both sides spoiling for a fight, that may well be a very temporary state of affairs.

Russia, furious over the September 27 arrests, said on October 2 it would impose travel and communications sanctions on Georgia, despite the promised return of the officers.

Moscow has also given its troops in Georgia "shoot-to-kill" orders, recalled its ambassador, and evacuated its citizens. The Russian carrier Aeroflot reportedly plans to cancel all flights to Georgia as of October 3.

The angry words and saber-rattling are the latest crisis in a 15-year decline in Russian-Georgian ties.

The Georgian government has accused Russia of backing separatists in its two breakaway regions, the frozen conflicts of South Ossetia and Abkhazia.

For its part, Russia is angry at Georgia's attempts to leave its orbit and head West.

Georgia's NATO bid received a boost recently when it was offered an "intensified dialogue" with the alliance. It has also been offered an Action Plan as part of the EU's integrationist Neighborhood Policy.

So plenty of context, but what about cause? Why has this row erupted now?

Paul Beaver, a London-based defense and security analyst, says it's hard to see what Georgia can gain by raising the stakes right now.

"I'm not sure by having a spy trial it's actually going to help the frozen conflicts or Georgia's membership of NATO or any of the other things that Georgia wants to do," Beaver said.

Some Russia analysts -- and the Russian president himself -- have seen a greater hand at work. This, the analysts say, is not about a local dispute between Russia and Georgia -- but a far broader struggle for influence in the region between Russia and the United States.

But Beaver doesn't think the United States would have very much to gain by antagonizing Russia.

"I think America and Russia have more to gain by being together, and I certainly don't see them [the United States] using them [Georgia] as a pawn," Beaver said. "Georgia might like to think that it's a pawn and it's very influential, but quite frankly it is a lower-order, lower-magnitude regional player."

So it seems Georgia would have little to gain by raising the stakes in terms of its NATO bid. Nor does it seem this latest spat will have any positive effect in Georgia's bid to solve its frozen conflicts -- an important prerequisite for joining NATO.

Perhaps the answer lies in the nature of discourse. A matter of style over substance. More posturing than an attempt to achieve any political goals.

Ghia Nodia is the director of the Caucasian Institute for Peace, Democracy, and Development in Tbilisi. He says the latest conflict shows Saakashvili employing his typical diplomatic methods.

"Georgia's president likes to do things in a very public and demonstrative style, and to somehow show to the people, 'This is what I'm doing,'" Nodia said.

And with local elections on October 5, Nodia says, that could be a fairly sensible political move.

"I think that Saakashvili got some extra publicity because of that [spy scandal], and of course it did not harm his election chances. However, all analysts agree that victory in these elections are guaranteed for the ruling party on the assumption that the elections will be completely fair," Nodia said.

Whatever the reasons for the latest dispute, what is clear is the paucity of good diplomacy. As analyst Beaver says, if you want to resolve a dispute amicably you don't parade spies on television.

It is, he says, an almost 19th-century way of doing things -- and one that has potentially serious consequences.

"The saber-rattling is extreme. It's actually quite dangerous as well, because there are so many other issues in Black Sea security and Caucasus security that should be looked at, and this is really taking everyone's eye off the problems with Islamic jihadists operating in the area," Beaver said. "It's taking the security services' eye off the main game, which is organized crime, which it must do something about." (Luke Allnutt)

RUSSIA RECALLS GEORGIAN AMBASSADOR OVER SPY SCANDAL. Russia said on September 28 it had recalled its ambassador from Tbilisi, one day after Georgia detained four Russian officers on spying charges. The Foreign Ministry also announced a partial evacuation of Russian personnel and their families from Georgia because of a "growing threat to their security." The evacuation was to start on September 29 and will be conducted by aircraft of the Emergency Situations Ministry. The Foreign Ministry also advises Russians to refrain from trips to Georgia.

Earlier in the day, Russia's Defense Minister Sergei Ivanov described the detention of the four Russian officers as "outrageous."

"All [recent] actions by Georgian authorities can be characterized as utterly outrageous, as an open desire to provoke the Russian Federation, with the type of hysteria typical of the Georgian authorities, into acting inadequately," Ivanov said. "Naturally, we demand resolutely the immediate release of all the [detained] Russian officers. Russia's reaction to these events will be adequate and sensible."

According to Georgian Interior Minister Vano Merabishvili, the four were members of the Russian Main Intelligence Directorate. He said they were detained along with more than 10 other people in the Georgian capital, Tbilisi, and the Black Sea port of Batumi, on charges of espionage.

Russian Foreign Minister Sergei Lavrov on September 28 called their detention part of Georgia's "anti-Russian policy" and urged the United Nations Security Council to step in to resolve the matter. Lavrov spoke to reporters on September 28 in Russia's Far East, as Georgian police were surrounding the Tbilisi headquarters of Russian forces in the South Caucasus.

"This can only be regarded as yet another manifestation of an anti-Russian policy," Lavrov said. "We have demanded that our citizens be handed over immediately. We will stand firm in securing their release by all means available to us." Lavrov also criticized Georgia's increasingly close ties to NATO and said the crisis merited the attention of the UN Security Council.

Speaking to reporters on September 28 in Moscow, Ivanov accused Georgia of violating agreements on the withdrawal of Russian forces from Georgia, where Moscow has retained two former Soviet military bases. "All of this is being done [by Georgia] to force out our peacemakers by all possible means, to make their status illegal, while violating absolutely all agreements that have been achieved earlier on peacekeepers and on the procedure of withdrawing the Russian military bases from Georgia," Ivanov said.

Russian news agency reports say that Ivanov also warned that Russia would deliver an "appropriate" response to Georgia and compared the arrests of the Russian officers to 1930s repression by the regime of Georgian-born Soviet dictator Josef Stalin.

On September 27, Georgian Interior Minister Vano Merabishvili said the four members of the Russian Main Intelligence Directorate were detained along with more than 10 others people in the Georgian capital, Tbilisi, and the Black Sea port of Batumi.

"The main objects of their interest were the defense of Georgia, problems of integration with NATO and future plans, the energy security of Georgia, opposition political parties and NGOs, certain units of the Defense Ministry, personnel as well as arms, military purchases, seaports, railway communications and transport capacity, and the military units deployed in the conflict zones," Merabishvili said.

Russian Defense Minister Ivanov also claimed on September 28 that six Russian servicemen had been detained and beaten by Georgian police near the western Georgian port of Batumi before being released. However, no other Russian officials spoke of this and Georgian officials could not immediately confirm the assertion.

After being summoned to Russia's Foreign Ministry, Georgian Ambassador to Moscow Irakli Chubinishvili said on September 28 that Russia was protesting the move and is asking for the immediate release of the four officers. News agencies also reported today that the Russian Embassy in Tbilisi has suspended the issuance of visas to Georgian citizens for travel to Russia.

RUSSIANS COMPLETE TAKEOVER OF ARMENIAN POWER GRID. After months of negotiations Russia's national electricity company completed late on September 26 its controversial purchase of Armenia's power-distribution network that will boost the already strong Russian presence in the Armenian energy sector.

The shares in the Electricity Networks of Armenia (ENA) were formally transferred to an offshore-registered subsidiary of the state-controlled Unified Energy Systems (EES) in the presence of Defense Minister Serzh Sarkisian and other senior Armenian officials.

The high-profile ceremony took place in Yerevan one year after the announcement of the $73 million deal. The Armenian government agreed to ENA's sale in September 2005 on the condition that the Russians assume the investment commitments and liabilities of the network�s previous owner, the British-registered Midland Resources Holding.

Aleksei Rapoport, the EES vice chairman present at the ceremony, said the Russian giant will invest $20 million in ENA during the first year of its operations. He said the deal was initiated by the Armenian government and emphasized Sarkisian's personal role in the process.

It is still not clear why the transfer of shares has taken so long. The Russians were reportedly having second thoughts about the takeover after a former Armenian Energy Ministry official implicated the ENA management in large-scale fraud. In a bombshell February interview with two Armenian newspapers, Felix Tadevosian alleged that an official audit of ENA found that Midland has grossly inflated its capital investments in the network and ran up more debts than was previously thought. ENA strongly denied the allegations.

The Russian takeover of ENA was first made public and presented in June 2005 as a "management contract" signed by EES and Midland. The legality of the deal was seriously questioned by the World Bank and the U.S. Agency for International Development (USAID). But the Western donors acquiesced when Midland and EES decided two months later to formalize the sale of ENA and seek the Armenian authorities' formal approval of the deal.

EES already controls, in one way or another, several major power plants that provide 80 percent of Armenia's electricity, including the nuclear power station at Metsamor. (Astghik Bedevian)

GUAM BRINGS FROZEN CONFLICTS TO WORLD STAGE. The countries that make up GUAM (now renamed the Organization for Democracy and Economic Development-GUAM) are pushing for a resolution of their "frozen" conflicts at the United Nations. On the sidelines of the 61st UN General Assembly in New York, Georgia, Ukraine, Azerbaijan, and Moldova on September 25 held ministerial-level talks, where they discussed the conflicts in Nagorno-Karabakh, Abkhazia, South Ossetia, and Transdniester.

In the last 15 years, frozen conflicts in the GUAM region, namely in Moldova, Georgia, and Azerbaijan, have affected the lives of over 16 million people. Not only that, but they've remained a threat to international peace and security, according to a joint statement by the GUAM foreign ministers to the General Assembly.

The push for greater recognition seems to have worked. A discussion on frozen conflicts in the General Assembly is now scheduled for November 6. Azerbaijani Foreign Minister Elmar Mammadyarov said that GUAM will continue preparatory activities until that time. "The GUAM heads of state in their joint declaration on the issue of conflict settlement called upon [UN] states and international organizations to further facilitate, within their competence, the process of settlement of conflicts in the GUAM area," he said. "Therefore, the inclusion of the new item on the conflicts in the GUAM area in the agenda of the General Assembly is an attempt to raise [the] awareness of the assembly about dangerous developments emerging from those unresolved conflicts."

Ukrainian Foreign Minister Borys Tarasyuk told the General Assembly that the protracted conflicts continue to destabilize peace and security in the region, and prevent economic development. What's needed, he said, is global awareness.

"It is an important step that will help to draw the attention to the need of more active and effective steps of the international community in order to achieve progress and settlement in conflicts on the territory of Azerbaijan, Georgia, and Moldova," Tarasyuk said. "These conflicts are among the main obstacles for the full-scale democratic transformations in the region, which is among the core elements of the regional policy of Ukraine."

Georgia, in particular, is placing high hopes on the General Assembly debate. It is dealing with two frozen conflicts -- in Abkhazia and South Ossetia. In November, South Ossetians will vote in a referendum on independence. Speaking at the General Assembly on September 22, Georgian President Mikheil Saakashvili said international organizations needed to lend a hand to find a solution.

"The essential elements of this package must include the demilitarization of Abkhazia and South Ossetia, backed by the active engagement of the UN, OSCE [Organization for Security and Cooperation in Europe], the European Union, and other international organizations," Saakashvili said. "This must include direct dialogue between parties on the ground, and here I mean the central Georgian government and the separatist authorities -- so that together we can assume responsibility for rebuilding the peace."

Russia, however, is not impressed. It dismissed the GUAM member states' attempts to engage a wider UN audience in matters that Moscow considers foreign-policy priorities. In particular, Russia supports independence drives in Transdniester and South Ossetia.

Russian Foreign Minister Sergei Lavrov called the GUAM initiative a "propagandistic step" and said that hearings at the General Assembly will not produce anything positive.

And last week in an interview with a Greek newspaper, Russian Defense Minister Sergei Ivanov said that Moscow will not allow GUAM peacekeepers into frozen-conflict zones, regardless of what is discussed at the General Assembly. As Russia is a veto-wielding permanent member of the UN Security Council, it certainly won't be plain sailing for GUAM. (Nikola Krastev)

QUOTATION OF THE WEEK. "The consequences may be very serious indeed, going as far as war between Georgia and Russia. There is a party of war in Georgia, most definitely. People there believe that they stand a good chance of winning this war, of recovering South Ossetia and of squeezing Russia out of there for good. There is also a party of war on our side. It is also prepared to provoke a conflict, assuming that the Georgians can be easily dealt with and in this case the Americans and NATO will be driven out of the South Caucasus. And when both sides are fomenting the conflict, and this is something which is happening, the situation is moving toward war." (Russian independent military expert Pavel Felgengauer, commenting to Ekho Moskvy radio on the escalating row between Russia and Georgia after the arrest of four alleged Russian military intelligence officers in Georgia on September 27)