Foreign Policy: What has Russia been trying to achieve in Georgia the last few days?

Clifford Kupchan: I think Russia was pursuing multiple objectives. The first was a reaction to the Georgian attack on Tskhinvali, the capital of South Ossetia, and a determination to drive Georgia out.

After that, a torrent of Russian anger flowed forward, motivated by the pursuit of several goals. First, to send a strong message that neighboring post-Soviet states will face serious consequences for seeking membership accession plans with NATO. Second, and relatedly, that the Caucasus is an area that Russia will ultimately in the end control. In the NATO and sphere of influence arena, they were settling scores for 18 years of Western policy designed to pry those states away and into the national system. Thirdly, to increase the circle of risk around the trans-Caucaus energy corridor and increase the likelihood of future (especially) oil and (even) gas lines passing through Russia. In that order.

FP: Oil markets have barely blinked the past few days, though, even as the Baku-Tbilisi-Ceyhan (BTC) pipeline has gone offline. What’s going on?

CK: The first point is that investors and markets, for many reasons, are in a bearish frame of mind. They are going to pay much more attention to bearish signals than bullish signals, period.

Secondly, markets know that the PKK [Kurdish guerrillas in Turkey], not the Russians, took BTC and its 850,000 barrels a day offline. I think that they are betting that BTC will come back online sooner rather than later and, correctly or incorrectly, don’t perceive major risk from this war to that line.

So, for a combination of reasons, this war has not exerted significant upward pressure on oil markets. But you can’t prove a counterfactual. If the war had not happened, oil could be a few dollars lower right now. So, we don’t know what the hidden price support from the war has been.

What I think is more important about the Russo-Georgian war for regional energy flows is not the present but the future. Multinationals and large investors will draw a big, bright red circle of risk around the South Caucasus energy corridor that the United States for over a decade now has gone to such great lengths to construct, and be more reluctant to ship new volumes through that corridor.

For example, the giant Kashagan field in Kazakhstan is just coming online. Instead of—as is being considered—barging significant volumes across the Caspian to Azerbaijan and into Baku-Ceyhan, or some supplemental South Caucasus line, I think the Kazakhs are much more likely to send that oil on a safer path, either through Russia or off to China.

FP: And that’s what Russia wanted?

CK: I don’t think it was the primary objective—that’s why I listed it fourth. But certainly, Russia has vocally objected to the stated U.S. policy of the construction of multiple pipelines. Implicit within that, in my view, and thinly veiled in U.S. policy, has been construction of a line that guarantees access for Central Asian and Caucasus hydrocarbons to world markets.

In English, that means construction of a line that doesn’t go through Russia. And so, I think a second-level reason for this invasion was to say, “OK, enough. We’re going to be playing realpolitik with bare knuckles from here on out, both with Georgia and in the great energy game.”

FP: What does this mean for the Trans-Caspian gas pipeline? Is it effectively dead now?

CK: The chances before were slim to none. Now they’re nudging toward none. From economic to producer-country to environmental reasons, there’ve been tremendous problems over a decade in getting that line built. This does drive another nail into the chances for that line.

FP: Do you see any likelihood that Russia would try to use its newfound increased leverage in Georgia to somehow get control of the existing BTC pipeline?

CK: My instinct is no, that there’s still just so far Russia’s going to go here. Now, there have been unconfirmed reports that Russia targeted the line in recent fighting and missed. I don’t know if that’s true or not.

The wild card here is: Where are the Russians going to stop? They seem to be kind of on a bender right now, so it’s hard to rule anything out. But since Medvedev did announce an end to hostilities (except for cleaning out pockets of hostility, and that’s a big “except”) and since they’ve worked with [French Foreign Minister Bernard] Kouchner and the crisis has been somewhat internationalized, my instinct—though not my conviction—is that they won’t interfere with or bring down a crown jewel like Baku-Tbilisi-Ceyhan.