The upcoming political transition in Russia, in which Dmitry Medvedev will succeed Vladimir Putin as president, may possibly accelerate a trend in Central Asia, in which the Kremlin uses its abundance of energy as a lever to achieve its geopolitical aims.
Over the past few years, Putin's administration has used the country's energy conglomerates, most notably Gazprom, the state-controlled natural gas entity, as an effective diplomatic tool to reestablish Moscow's economic and political dominance in Central Asia. [For background see the Eurasia Insight archive].
Medvedev was elected in a carefully managed ballot on March 2 and is scheduled to take the oath of office on May 7. As a long-time member of Gazprom's board, it figures that he will work to tighten the knot binding energy policy and statecraft. The president-elect has stated that his first trip as chief executive will likely be to a member of the Commonwealth of Independent States, the grouping of former Soviet republics.
Many Russian experts believe Medvedev's most likely destination is Turkmenistan. Shortly after the Russian presidential vote, Medvedev accepted an invitation from Turkmen leader Gurbanguly Berdymukhamedov to visit Ashgabat. Since Berdymukhamedov rose to the presidency following the sudden death of Saparmurat Niyazov, Ashgabat has become a favorite destination for US, EU and Russian diplomats. [For background see the Eurasia Insight archive].
Though Medvedev after May 7 will be the nominal chief of state, many experts, both in Russia and the West, believe that Putin will continue to call the shots in most areas of strategic importance. In an indication that Russia's center of power will not shift, Putin, who will serve as prime minister under Medvedev, was the dominant Russian political figure during the March 17-18 visit to Moscow by the US secretaries of state and defense, Condoleezza Rice and Robert Gates. Medvedev, meanwhile, played an ancillary role during the visit.
It seems that a division of labor between Putin and Medvedev is already taking shape, in which Medvedev, the technocrat, handles domestic economic and social concerns, while Putin addresses questions relating to Russia's global role. Prior to his election, Medvedev was a deputy prime minister with his primary responsibility being the development of Russia's social sphere. In effect, little may change during Medvedev's presidency, as among his top policy aims is improving Russian schools and improving the country's housing stock.
If Medvedev indeed concentrates on domestic economic issues, it would leave Putin to stay in charge of grand strategy. That would mean that the outgoing president/incoming prime minister would remain centrally involved in such issues as Russia's dealings with Central Asia, given that region's vital importance as a supplier of natural resources. [For background see the Eurasia Insight archive].
Putin also appears likely to retain his leading role in ongoing strategic discussions with the United States, EU and the North Atlantic Treaty Organization. The main aim of the visit of Rice and Gates to Moscow was to forge a strategic bargain with Moscow covering the disposition of armed forces in Europe. In recent months, Russia has grown increasingly critical of a US plan to deploy missile defense systems in Central Europe. [For background see the Eurasia Insight archive]. The two sides failed to resolve their differences during their discussions March 17-18.
Russia's intent to maintain its competitive advantage in Central Asia in the face of growing competition from both the West and China was underscored March 11 by Gazprom's announcement that it would dramatically increase the price that it pays Turkmenistan, Kazakhstan and Uzbekistan for natural gas. [For background see the Eurasia Insight archive]. The move could well prevent the United States and European Union from building a trans-Caspian pipeline that could threaten Russia's current stranglehold over gas exports. [For background see the Eurasia insight archive]. At the same time, Gazprom is taking on considerable risk.
"It means the price for gas that Gazprom buys for itself will rise significantly," Gazprom CEO Alexei Miller told Putin during a March 14 meeting, according to a transcript posted on the Russian presidential website. "It puts Gazprom in a difficult situation, because Gazprom purchases [gas] for its own use and for export purposes."
To offset the large bump-up in the price it pays for Central Asian gas, Miller indicated that Gazprom intends to pass along the rising costs to its customers, especially those in the EU. Even so, it seems that Caspian Basin energy costs are caught in an inflationary spiral that could create headaches for the Putin/Medvedev team.
For example, many experts anticipate that Russia's energy relationship with Ukraine retains the potential to develop into a major international crisis. Moscow and Kyiv have already engaged in highly charged talks over the cost of Russian energy exports. Ukraine is dependent on Russian gas, and Moscow makes no secret of wanting to impose a dramatic price hike on Kyiv in order to recoup the added costs paid by Gazprom to Central Asian producers.
At the same, Russia is not completely free to dictate a price because the overwhelming share of Russian exports to the EU pass through Ukraine. Thus, Kyiv can, and already has exerted pressure on Moscow to keep prices down by disrupting EU-bound pipelines. About 85 percent of Russia's income from energy exports comes from fuel shipped to the EU. In turn, energy profits account for more than one-third of Russia's roughly $283 billion annual budget.
Perhaps a more immediate challenge will be keeping a planned expansion of a key Central Asian pipeline network on track. Russia, Kazakhstan and Turkmenistan committed in May 2007 to expand the Prikaspiisky Pipeline network. [For background see the Eurasia Insight archive]. Questions remain over whether work on the expansion will commence as originally envisioned during the second half of 2008.
Sergei Blagov is a Moscow-based specialist in CIS political affairs.