Georgia’s Gazprom mystery

A couple of months ago the Georgian public was shocked to learn through the Russian media that their Minister of Energy and deputy Prime Minister was planning negotiations with the Russian gas giant Gazprom. He did not deny this and other top officials started to lecture the public on the necessity of “diversifying energy supplies.” One of these officials went so far as to say that: “politics and economics are different things and they should be kept far apart from each other.”

Like many post-Soviet republics, Georgia has been heavily dependent on Gazprom with all the consequences this entailed. First, the price of Russian gas shot up (in 2005), and then in early 2006 the pipeline from Russia to Georgia was blown up and for some reason it took weeks to repair while Georgia (and Armenia) was freezing in the dark. Georgia was lucky to rid itself of this dependence when the Baku-Tbilisi-Erzerum pipeline was launched soon after. Since then, the country has enjoyed an uninterrupted supply of Azerbaijani gas which is said to be substantially cheaper than Gazprom’s. Since then, quite a few Russian think tanks openly lamented the fact that Moscow had lost one of its main instruments for putting pressure on Tbilisi.

Of course, civil society reacted very badly to the news of these proposed negotiations with Gazprom and the comments about “keeping economics separate from politics” (but only in Gazprom’s case) just made it worse. When asked, top officials contradicted each other: some said that it was about diversification (at least partly replacing Azerbaijani gas), others said it was happening simply because Armenia was planning to import more Russian gas and so Tbilisi had no choice but to talk to Gazprom…

This confusion is easily explained – major decisions in Georgia are taken by a man who has no official position. This is Bidzina Ivanishvili, the billionaire who won the landmark 2012 elections, retired from the Prime Minister’s job in 2013, but still meets government officials regularly. So it appears that Georgian ministers had little idea of what was really going on with Gazprom.

Ivanishvili’s involvement made the Gazprom issue even more controversial. The fact is that he owned (and may still own) about 1% of Gazprom shares. The deputy Prime Minister tried to ridicule the journalists who reminded him of this and also asked him whether Ivanishvili’s alleged interests were behind the Gazprom talks. But unless the Ivanishvili-Gazprom relationship is clarified, such awkward questions will persist. Hardly anyone in Georgia can check the Gazprom shareholder list and so no-one will believe easily that the billionaire has sold his share. Buying and selling Gazprom shares is notoriously difficult.

So far, so typical post-Soviet conspiracy theory. However, this does not change the fact that replacing Azerbaijani gas with Russian gas is an extremely dangerous game. Georgia simply cannot afford to alienate Azerbaijan. It is thanks to its strategic partnership with Baku that Tbilisi not only reduced its dependence on Gazprom, but also became part of important energy and trade corridors. Before the Baku-Tbilisi-Erzerum gas pipeline, another milestone project –  the Baku-Tbilisi-Ceyhan oil pipeline – was the first case of Caspian oil bypassing Russia (from Azerbaijan through Georgia to Turkey). This was the project that first attracted the West to Georgia in the late 1990s when the country was still mired in post-Soviet chaos. Baku-Tbilisi-Ceyhan was just the beginning. Since then, Georgia has been asserting itself as a regional hub and part of the New Silk Road (which will connect China to Europe). All this is thanks to the partnership with Baku.         

Following extensive protests by the political opposition and civil society, the government came up with some new excuses. “The need to diversify energy supplies” was once again mentioned and Ivanishvili himself said that Georgia was going to import not only Russian but also the Iranian gas (although there is no infrastructure to import Iranian gas to Georgia on a regular basis). Another excuse was that there was not enough Azerbaijani gas for Georgia. This visibly annoyed Baku with President Aliev making an unexpected visit to announce that Azerbaijan had more than enough gas to supply the whole region, Georgia included. Tbilisi tried to calm things down and promised that Azerbaijan would remain Georgia’s main supplier. Even so, a few weeks later the deputy Prime Minister met the Gazprom leadership. We still do not know what was discussed at this meeting. The most harmless version is that Gazprom will be allowed to supply gas to companies in Georgia, a privilege currently enjoyed only by Azerbaijan. There may be a logical explanation – Azerbaijan gas is quite cheap for households but rather expensive for businesses.

But once again, there may be more than meets the eye. The Georgian public remains in dark (in this case only metaphorically) and talks between Gazprom and the government continue. The conspiracy theories would stop if everything were made clear and transparent. Of course, Gazprom is not a company to favour transparency and maybe this is why the government has to keep everyone guessing. But the awkward questions should persist. The current government’s foreign policy has been much questioned of late. Even though Georgia has signed the Association Agreement with the EU, Brussels will not be able to help Tbilisi out if it cuts off ties with its strategic partners and brings back Gazprom. A lack of transparency and accountability is always dangerous. Georgian civil society has overcome many obstacles, but unfortunately it is not yet strong enough to hold the government to account when Gazprom is involved.  

Tornike Sharashenidze is a professor and head of MA programme in International Affairs at the Georgian Institute for Public Affairs (GIPA) where he lectures on the history of diplomacy.