WATCHING THE WORLD: Putin bullies BP, Georgia

Aug. 18, 2008
If anyone ever had any doubts about Russian intentions regarding the Caucasus as an energy bridge for the West, those doubts should have been laid to rest by now.

If anyone ever had any doubts about Russian intentions regarding the Caucasus as an energy bridge for the West, those doubts should have been laid to rest by now.

Before we start in on the violence that racked Georgia, though, it might do well to consider a sidebar that took place in Moscow.

On Aug. 13, Robert Dudley, chief executive officer of UK-Russian oil company TNK-BP Ltd., was summoned to appear to appear before Russian prosecutors for alleged violations of labor laws by his company.

Russia’s Federal Labor and Employment Service had asked a court to look into a number of violations relating to labor protection and the use of a foreign work force at TNK-BP.

TNK-BP under investigation

Last month, the service conducted an investigation and found that TNK-BP “had not complied with the recommendations.” That prompted the service to ask a court to look into the case.

BP has been embroiled in a bitter dispute with its 50-50 Russian partner in TNK-BP, a consortium of Russian industrialists known as AAR, who have been demanding Dudley’s resignation amid speculation that BP could be forced to give up its 50% stake.

Is there any connection between that little bit of bullying in Moscow and the onslaught that took place in Georgia last week?

It would not have been lost on Russia’s chief bully, Vladimir Putin, that BP decided to shut down its three pipelines in the Caucasus. In fact, as more than one observer has noted, that shutdown was one of the aims of Russia’s cross-border incursion into Georgia.

A variety of targets

BP, of course, is hardly the sole target of Putin’s grand strategy. In that regard, he has a number of plumper targets in mind: Azerbaijan, Kazakhstan, and Turkmenistan, just to name a few.

These countries are the potentially great producers of oil and natural gas that Western governments are counting on. Indeed, hopes have long been high that these countries will be ready, willing and able to provide the West with reliable supplies of oil and gas, bypassing Russia in the process.

BP, while hardly a government entity, has played a major role in the development and implementation of that strategy—a matter that has hardly gone unnoticed in Moscow.

The techniques Putin used to bring Georgia to heel have the same thuggish quality as the techniques he has used to silence domestic opposition and to expropriate the energy assets of OAO Yukos, Royal Dutch Shell PLC, and now, BP.

It’s all of a piece: Putin knows that oil and gas fuel the West’s political and economic preeminence as well as Russia’s resurgence as a military and economic power. By holding oil and gas hostage, Putin can weaken his enemies while strengthening himself.

When Russian bombs hit Georgia and a Muscovite court took up charges against BP last week, the unpleasant implications for the rest of us were all too evident.