Military problems, specifically military-political ones, gave birth to GUUAM. It was precisely the need to join military efforts that dictated the consolidation of Georgia, Ukraine, Azerbaijan and Moldova under the roof of a small group abbreviated as GUAM. All of the member states of the alliance suffer from similar problems. In the wake of Soviet collapse, all of them had Russian troops on their soil. Russia has had military bases in Georgia, the 14-th army (that later shrank into a Russian military group) in the Trans-Dniester Republic of Moldova and the Black Sea Fleet in Ukraine’s Crimea. Also there are unsettled problems related to keeping conventional weapons in Azerbaijan.

    The future of conventional arsenals required signing bilateral agreements between Russia and the country keeping them. That process proceeded amid efforts to adjust Europe’s Conventional Arms Treaty to new realities following the break-up of the Warsaw Pact alliance and NATO eastward expansion. In the course of the Treaty update, Moscow had a chance to confirm, in a multilateral agreement, a provision vesting Russia with the right to maintain its military presence in those countries forever. GUAM member states found it necessary to consolidate their efforts to kill Russia’s chances of doing so.

    GUAM states eventually succeeded in defending their Treaty-related interests. So GUAM had successfully performed its mission and was expected to dissolve. But that has not happened. Not only has the alliance not broken apart, but it also saw the accession of a new member in the form of Uzbekistan, who added a second “U” to the abbreviated alliance name. The reinforced alliance was in one way or another caused by the peculiar features of its member states’ relationships with Russia.

    Ukraine, Georgia, Uzbekistan and Azerbaijan have not been parties to Tashkent’s (Uzbek capital) Collective Security Treaty as of today. Kyiv has never entered the Treaty, while the latter three withdrew from the pact, confident that an alliance with Moscow would undermine their own interests. Baku (Azeri capital) is angry over Moscow’s military support for Armenia and its stand on [the status of] Nagorno-Karabakh. Tashkent is not happy about Russia building up its military presence in Central Asia, while Tbilisi (capital of Georgia) alleges that Moscow is far from being neutral in settling the Abkhaz crisis.

    But this is the obverse of the medal. The countries making GUUAM’s nucleus (Azerbaijan, Ukraine and Georgia) stay together in the name of one idea, which has not been officially proclaimed however. This is to ensure the bypassing of Russia in the planned transit of Caspian oil. Uzbekistan’s accession to the alliance only strengthens its old members’ foothold in the TRASEC project (known as the new Great Silk Road, which goes alongside Russia’s Turkmenistan-Siberia Railroad). Even today cargoes are going from Uzbekistan to Europe via Turkmenistan and Ukraine bypassing Russia.

CASPIAN SOLITAIRE

    Caspian oil (estimated as the world’s second largest, trailing after Middle East oil deposits), has three roads to Europe. The first goes via Chechnya and Russia’s seaport of Novorossiysk. The second route lies through Turkey’s seaport of Ceyhan. And, lastly, Kyiv’s favorite – the path from Baku to Europe via Georgia’s Supsa, across the Black Sea and further to Europe by the Druzhba oil pipeline. All of the routes have much in common. They are all half-finished, waiting for investors. They also all skirt potential or smoldering conflict zones. This latter circumstance may well disturb smooth oil supplies, which puts any investments in the project at risk. But many countries, both industrialized and underdeveloped, can hardly resist the temptation to share in the Caspian oil pie. And each country pursues interests of its own.

    Ukraine annually consumes around 16 million tons of crude oil, with domestic oil output being a mere 25 percent of that quantity. Dependence on Russian energy supplies has reached a critical point, even endangering Ukraine’s status of an independent state. So Ukraine had to consider diversifying its imported oil sources.

    As far as Georgia and Azerbaijan are concerned, not only do they hope that Caspian oil will help them feed their economies, but they also hope to settle long-lasting political conflicts, like those surrounding sovereignty over Azerbaijan’s Nagorno-Karabakh province, without whose settlement stable and smooth oil transportation could hardly be possible.

    Russia does not need Caspian oil as such. What it needs are potential revenues from oil transit across its territory. Of no less importance is the possibility to maintain its influence in that region, which has recently lessened dramatically. This is why Moscow views alliances like GUUAM as a threat to its interests in the Caucasus.

    In the case of the United States, the Caspian is not the only region that promises much oil (a fact in itself of great importance to the US). Experts forecast that in ten years from now the West and the States could absolutely give up their dependency on oil supplies from the world’s five biggest oil exporters, including US’s long-time “friends” – Iran and Iraq, a prospect opened by direct access to Caspian oil. Implementation of the above-mentioned Caspian projects, as well as of those for the construction of oil pipelines bypassing Russia, could oust Russia from Central Asia and Iran, while oil transit across Turkey plays into hands of Washington’s partner in NATO alliance, Ankara.

    So it is no surprise that [the project to transport oil through] Turkey’s Ceyhan is the favorite among the troika of Caspian oil transit projects. An  oil pipeline to Ceyhan, which will take from two to four billion USD, has yet to be constructed. On October 29 last year, Georgia, Azerbaijan and Uzbekistan signed with Kazakhstan and Turkey the so-called Ankara Declaration on Caspian and Central Asia’s oil exports from Baku to Ceyhan via Tbilisi. But in the event Caspian oil quantities are as big as experts estimate, then Ceyhan alone will not be able to serve them.

    In a situation as unfavorable to Ukraine as this, Kyiv has to undertake moves and come forward with initiatives, which, on the one hand, could help it build up its influence and establish solid contacts in the first place with Azerbaijan and Georgia, and, on the other hand, ensure that the moves and initiatives be explicitly interpreted as strengthening security in potential oil transit regions. Kyiv’s effort shall be viewed with special pleasure in the US, who is nervous about the destiny of high-promising oil pipe-lines amid [Armenian-Azeri] quarrels over Nagorno-Karabakh, on-and-off clashes with rebels in Georgia and war-prone situation in Chechnya and Russia on the whole. Kyiv comprehends well that the last word on Caspian oil transit routes rests with the US. So Ukrainian generals rushed headlong into the fight for Caspian oil.

A WAY TO DEFEND CASPIAN OIL

    Any friendship is worthy of anything if it is strong enough. It is precisely the Ukrainian military who have long paved the ground for that kind of friendship with Georgia and Azerbaijan. While Azerbaijan accused Russia of illegal arms supplies to Armenia, the latter, in turn, pressed similar charges against Ukraine.

    Two years ago, the Armenian Defense Ministry made an official statement, saying that in 1993-1995 Azerbaijan bought from Ukraine and updated over 150 tanks, which allowed Baku to double its effective tank fleet. No comment on that statement came from Ukraine, while the scale of Kyiv’s assistance to Baku was hardly comparable with that of Russia’s help to Yerevan (including tanks and other armored hardware, volley fire weapons, operational-tactical missiles etc worth a total of $1 billion).

    During [Azeri President] Heydar Aliev’s official visit to Ukraine in March 1997, an agreement on cooperation in military technology was signed among others, which defense experts assessed as an important, if not essential component of successful oil-defense cooperation. The first GUUAM Defense Ministers‘ meeting, held in Baku last January, was attended by two representatives of Ukraine: Defense Minister Olexander Kuzmuk and his deputy in charge of arms, president of Ukrspetsexport monopoly trading in arms on behalf of Ukraine. The UNIAN news agency reported, citing a senior Defense Ministry official, that the meeting discussed, among other things, a possibility of Ukraine’s involvement in the effort to update Azeri armored hardware. Azerbaijan’s army has in the inventory 147 T-72 tanks and 123 T-55 tanks requiring repairs or an update. That fact, naturally, did not avoid notice in Armenia. At the May’s Defense Ministers’ meeting of the CIS member states Armenia pressed charges against Ukraine of supplying as many as 300 tanks to Azerbaijan. First Deputy Defense Minister General Ivan Bizhan, who was representing Ukraine at the meeting, denied the charges against Ukraine, saying he could not comment on events, which had never taken place.

    Ukraine’s military contacts with Georgia have been productive and reliable as well, especially since the time when Moscow, meaning to bring political pressure to bear on Tbilisi, had terminated military-technological cooperation with that country. These days, Georgia’s defense experts take advanced training courses in Ukraine, who also provides its training grounds for Georgian air defense units and helps the development of Georgia’s navy, both in practice and theory. One of the former deputy commanders of Ukraine’s navy has been appointed as navy adviser to Georgia’s defense minister. For all the problems involved in the development of a navy of its own, Ukraine has recently presented Georgia’s coast guards with a missile-carrying boat.

    Ukraine’s intensive defense contacts with countries involved in Caspian oil projects have insufficient economic foundation, however, with oil transit routes bypassing Ukraine thus far. At best, having been enriched by oil, Georgia and Azerbaijan would buy more weapons from Ukraine in the future. But that scale of prospective income would be absolutely incommensurable with potential revenues from oil transit. One of a few ways for Ukraine to make a lodgment in that region would be peacekeeping efforts, for which both defense contacts already established and GUUAM potential as a regional organization serve the best.

    The first (last January’s) GUUAM Defense Ministers’ meeting was to sign a long-waited-for agreement on setting up a mixed peacekeeping battalion. That agreement, if signed, would be in development of the initiative put forward by Defense Minister Kuzmuk at a preceding meeting in Tbilisi, to form a mixed Ukraine-Georgia battalion, among whose missions would be security of safe oil transit from Baku to Odessa via Georgia. GUUAM’s small army was to assume the same mission. However, the agreement has been never signed. Instead, the defense ministers signed a communiquй, calling for joint peacekeeping efforts and military exercises.

    For Kyiv, however, actual formation of a mixed peacekeeping unit is not that important. Of much greater importance to Kyiv is that region’s confidence in Ukraine’s peacekeeping initiatives. The stronger the better. That confidence should live at least until the final decision on the oil transit route is made.

    Generals, in their turn, “thrust troops” to fight the good fight. On April 16, a joint peacekeeping exercise opened at the Yalgudja training ground just near Tbilisi, in which servicemen from Ukraine, Georgia and Azerbaijan took part. The exercises practiced cooperative measures in emergency situations along the Baku-Supsa oil pipeline. It was precisely Ukraine’s pipeline engineering unit, which played the first violin. It proved that only Ukrainian army includes units capable of sealing breaks in high-pressure pipelines and constructing bypass pipelines. The exercises were timed for the opening ceremony of an export oil pipeline to transport early Azeri oil westward. The 830-km long pipeline goes from Sangachal oil terminal near Baku to Georgia’s Supsa. The terminal, whose carrying capacity is 5.1 million tons a year, serves oil tankers with a capacity of up to 150 000 tons. But the first tanker carrying early Azeri oil, Italy’s Agip Piemont, left Supsa for a Spanish oil refinery, rather than for half-finished oil terminal near Ukraine’s Odessa.

    While Azeri and Georgian officials reiterated that the western route is not an alternative to the northern one going from Baku to Russia’s Novorossiysk via Chechnya, Georgian President [Eduard Shevardnadze] invited both [presidents] Heydar Aliev [of Azerbaijan] and Leonid Kuchma [of Ukraine] to attend the opening ceremony. All the three were not interested in the Russian route. While Aliev and Shevardnadze had every reason to celebrate that event, then only Ukrainian army’s potential did not let Leonid Kuchma feel an outsider at the ceremony.

    At the NATO summit meeting celebrating its 50-th birth anniversary on April 25, at which GUAM expanded to GUUAM, heads of state signed an agreement highlighting joint peace efforts. The agreement, which was of great importance to Kyiv, says that the sides will “strengthen cooperation in conflict and crisis settlement, consolidate efforts in the fight against manifestations of ethnic strife, separatism, religious extremism and terrorism.”

    One or two months later Ukraine made yet another attempt to draw the attention of the circles concerned to security aspects. International conference on the subject “Ukraine and security of transport corridors in the Black and Caspian Seas” was held in Sevastopol on June 9 under the auspices of the National Institute for Ukrainian-Russian Relations. The final declaration says, “Ukraine may become a key component of a pipeline security structure. It is prepared to initiate the formation of a multinational pipeline security network in the Black Sea and Caspian Sea region.” It also says that “the function to create a pipeline security machinery could be assumed by OBSEC (Organization for Black Sea Economic Cooperation) and GUUAM, whose lines of development could also include cooperation at the political level in ensuring international security.”

    In which form the “security machinery” could exist within GUUAM? As far as the above-mentioned “cooperation at the political level” is concerned, Kyiv suggests that special agencies in charge of coordinating joint efforts be set up in each of the GUUAM member countries. But insufficient political resources are often compensated for by military ones.

    Realistically-thinking analysts say that neither high level of technical equipment in armed forces nor adequate army training standards will allow GUUAM countries to follow the main principle on which any military alliance is based: “One for all, all for one”. At least for the reason of territorial remoteness from one another. But a chance remains that GUUAM will be granted status of a regional organization vested with the right to hold peacekeeping operations.

    Earlier, official Kyiv declared its preparedness to send Ukrainian peacekeepers to crisis zones in Nagorno-Karabakh and Abkhazia on condition, however, that peacekeeping operations would be held under the auspices (i.e. on the funds) of either the United Nations or the Organization for Security and Cooperation in Europe. Otherwise, Kyiv would hardly be able to carry the peacekeeping burden, even if GUUAM gained for itself the right [to peacekeeping operations]. That idea will never be translated into reality. But they could capitalize on it as successfully as they do on generals’ plans to form GUUAM’s mixed peacekeeping contingent.

    There is another way to create a “pipeline security machinery in the Caspian region” though, for example, by setting up NATO bases in Georgia or Azerbaijan’s Apsheron. There are ardent proponents of that idea in both countries. The North Atlantic Alliance itself has given no comment thus far. But Kyiv is unlikely to be happy about such a turn of events. For the simple reason that, if so, Ukraine is going to lose its status of the “key component of the pipeline security system.”

NIX! NO MOVING FORWARD!

    Today, Ukraine’s defense officials seem to fear the prospects opened to GUUAM. Defense Ministry gives less and less comments on prospects for consolidation at the regional level. Even Baku, rather than Kyiv, was the first to report about GUUAM defense ministers’ meeting in Yavoriv near Lviv on August 6 this year. According to Ukrainian Defense Ministry press-office, the meeting, which was of a consultative character, did not sign any documents. GUUAM Defense Ministers examined questions related to strengthening defense cooperation within GUUAM, as well as coordinating efforts at international organizations and forums.

    The reason why GUUAM decided to slow down defense cooperation between its member states, or at least not to advertise it, was that official Kyiv has recently been signalizing its loyalty to Moscow, whom GUUAM makes see red. Take, for instance, July’s interview with the Komsomolskaya Pravda daily by Russian Foreign Minister Igor Ivanov, who complained that “certain member states of CIS afford simultaneously uniting into political groupings of the GUUAM kind.” “I prefer calling things by their proper name. GUUAM is a political organization which is going to evolve into a military-political alliance,” Ivanov said.

    Kyiv’s circumspective moves are explicable enough. The incumbent president banks upon Russia’s support in the hope to win a second term in office. In his days Leonid Kuchma had successfully played that trick. On the eve of presidential elections generals prefer to comply with election strategy of the supreme commander, shying away from policy games. They did so amid debates among national political elite on the advisability of Ukraine’s membership of GUUAM. An influential Ukrainian daily (Zerkalo Nedely), that ranks high among the circles in power, published a story headlined “Myths of Ukrainian Diplomacy.”

    The article slammed “Westward-bent” Foreign Minister Boris Tarasiuk, who heard about the Caspian region, GUUAM and Odessa’s oil terminal. “The authors of the Odessa-Brody oil transit project are unfindable today. But there was somebody who set out the bait which Ukraine swallowed. And started digging, laying away lots of millions. They had laid part of the pipeline before they stopped in hesitation whether to continue. They have not the money to finish the project. In addition, they have recently “found out” that oil tankers are absent either. [Azeri President] Aliev was about to present us a gift, filling a Ukrainian tanker out of turn, but they failed to find any tanker. Oil as such is absent. Potential oil reserves calculated by the Azeris have proved not that huge. The question of the distribution of Caspian oil deposits has not been settled thus far. To make things worse, the US insists that Caspian oil should go across the territory of Turkey, rather than Ukraine. If these trends continue, we will soon have to dig out the pipes, cursing foreign policy schemers,” the story says.

    “Leonid Kuchma once had to make statements, proving the unprovable: as though GUUAM is not a CIS rival. In the course of his most recent tour of Caucasus republics, B.Tarasiuk suggested that Georgia and Azerbaijan should advance even further, creating an organizational basis for GUUAM’s development. The process is gaining momentum. Leonid Kuchma will soon have to yet again interpret for Ukraine’s CIS partners statements made by his ambitious minister,” the article goes on to say.

    Many believe that the article is a collective fruit of a team of pro-Russia officials at the National Security and Defense Council, whose positions are fairly strong due to peculiarities of the ongoing presidential campaign. So the military need no haste, tying to secure the nation’s economic interests outside its borders. They will not do so at least until the presidential race comes to an end.

ODESSA WILL SPEAK FOR ITSELF

    All the efforts undertaken by Ukrainian diplomats and military in search for approaches to Caspian oil remain senseless as construction of Odessa’s oil terminal procrastinates. Its rated capacity is 40 million tons of oil per year. The construction was planned to take 22 months and 300 million USD. If that project was a success, the Odessa terminal would have worked “by the sweat of its brow” for two years now.

    The terminal should have worked by the following scheme. Three tanker wharves remain off the harbor at a distance of 25 kilometers. Odessa harbor accepts tankers with a capacity of up to 150 thousand tons. Oil is pumped from tankers in coastal storage facilities (18 oil reservoirs with an aggregate tankage of 400 thousand cubic meters), and further – via main pipelines — to oil refineries. The length of the pipeline from coastal reservoirs to the main pipeline, which has yet to be constructed, is 52 kilometers.

    To date, the pipeline has been half-finished due to insufficient funding of the project. But that is only part of problem. After the Cabinet of Ministers made six years ago the decision to build Odessa’s oil terminal, the project has more than once served as a stumbling bloc in relations between Odessa administration and Kyiv. In 1993-1994 alone, the administration of Odessa oblast led by the then governor Ruslan Bodelan issued at least three resolutions freezing oil terminal construction projects on ecology grounds. Things had come to picketing construction sites by members of Russia’s ecology society Rainbow Conservators. Meanwhile, second stage construction of an oil terminal with an equal capacity of 40 million tons was at full swing in Novorossiysk.

    In August last year Ruslan Bodelan was elected Odessa Mayor. He was strongly against the oil terminal construction project as before. “Speaking at Verhovna Rada on that issue I attacked the terminal construction in Odessa as the greatest affaire of this century. But I had never opposed the terminal construction as such. I only demanded that calculations of its economic feasibility be made. Where will oil come to Ukraine from, I demanded? An answer remained in a limbo. I will object the construction until the problem is settled at the political level. I.e. until an agreement is signed between Ukraine on the one side and Kazakhstan, Azerbaijan and Georgia on the other, providing guarantees that Caspian oil would go across the territory of Ukraine. Pending such an agreement, investing two billion US dollars in that project would be a crime. It’s a secret to nobody that several routes for Caspian oil transportation are being considered. The oil may go across the territory of Turkey, Romania, or, less likely, Ukraine. Can you imagine a situation in which oil goes westward bypassing Ukraine? What good will the terminal do to Ukraine then?” Bodelan once demanded.

    The issue of oil terminal construction has two sides. On the one hand Ukraine cannot afford laying away billions of dollars in absence of reliable guarantees that oil would go via its territory. On the other hand, it would be problematic for Kyiv to claim a share in the project until construction of the oil terminal is completed.

    That is in theory. And what is in practice? Speaking in Istanbul on August 17, US Energy Secretary Bill Richardson praised Turkey as the principal ally of the US, its largest energy market and the key interlink in the Caspian region. He confirmed US’s adherence to the East-to-West transport corridor and the Baku-Ceyhan route of Caspian oil. Mr. Richardson expressed confidence that oil produced in East Caspian region would make the Baku-Ceyhan pipeline a commercial project. He also said that the US fully realizes that oil transit through the Bosporus will not remain the only route for long, because oil volumes are on a steady rise. Kyiv could interpret that statement by the US Energy Secretary as that giving Ukraine a chance for a share in the Caspian oil project. The US itself realizes the need to diversify transit routes for Caspian oil. But Washington, however, is not planning to lobby for Kyiv’s interests in that region. Asked about the US view of the Caspian oil-Ukraine problem, US Ambassador to Ukraine Steven Pifer emphasized the need to create a favorable investment climate in this country. To date, $2.8 billion have flown in Ukraine in foreign investments, of which $500 million came from its biggest overseas investor — the US, he said. But that amount is clearly insufficient comparing to US-invested $6 billion in Poland, Mr. Pifer went on to say, expressing the wish that Ukraine catch up with Poland by that indicator.

    The US Trade Development Agency set aside $750 000 for Ukraine to prepare a feasibility report for the project. The money is designed, among other things, for studying the scale of demand for Caspian oil in Central Europe, in particular, in Poland, Hungary and the Czech Republic, which could draw private investments in that project, the Ambassador indicated. Ukraine needs foreign investments to complete the construction of Odessa-Brody oil pipeline and its branch line to Poland. But private investments can only flaw in if potential investors see that the project is commercially viable, Mr. Pifer believes.

    As far as economic feasibility of Caspian oil transit across Ukraine is concerned, the situation is not that hopeless. Persian Gulf oil is currently transported to Europe via the Suez Canal or round Africa. The route via Turkey and Ukraine is shorter by two and three times respectively. But foreign investors are hard to persuade that it is worthwhile to invest in this country, however. But even if the next President were to take measures for fundamental economic reforms and effective taxation policy, his efforts would give fruits in two years at the earliest. A burnt child dreads the fire, they say. That is why the West will think twice before once again trying its fortune in Ukraine.