Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

Grählert, Sven

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

An Analysis of Price Convergence and Divergence Phenomena

von Sven Grählert (Autor:in)

BWL - Wirtschafts- und Sozialgeschichte

Zusammenfassung

Inhaltsangabe:Abstract:
Integration and Dis-Integration or Dis-Integration and Integration or Dis-Integration and Re-Integration can be quite a word play. The Dis-Integration of the former Soviet Union (FSU) in the early 1990s marks a serious and unprecedented development in modern history. It was a break-up of the Union of Socialist Soviet Republics into fifteen newly independent states. Hereby, twelve states formed the Commonwealth of Independent States (CIS), a structure that was to keep some order over the break-up. Three countries the Baltics announced their total independence and declared no will to be part of the CIS. A later Integration or Re-Integration within the CIS is being actively discussed and debated up to now.
Several theories have evolved on the future of the region. Huntingtons thesis predicts the Clash of Civilizations. He argues that the future battle over world politics will be over religious and cultural factors. Huntington predicts a split-up of the world along religious lines. In turn, Duncan rejects religion to be a factor in the current developments of the CIS. He limits Kuzios idea of a division between the CIS into radicals and pragmatists among the two groups the Westernizers and Slavophiles.
Duncan concludes that there is generally a shift towards pragmatism in the foreign policies of the member states of the FSU. Disillusionment with the West is widespread. Most important factors that make countries tend towards a Westernist or Eurasianist course are linked to ethnicity and conflict. The author views the political regime and economic reforms are less important. Other studies focus more on the relationship between Russia and the other CIS countries. Alexandrovas arguments support the trend towards pragmatism. She adds that Moscow gave up the concept of re-integration, which it was convinced of in the first years of transition. Russias foreign policy from Yeltsin to Putin shifted from Multilateralism to Bilateralism. Russian capital, invested in the near-abroad, is seen as a strong instrument to influence other CIS states and force them to Moscows security policy.
Another -less recent- study on Integration and Disintegration from 1997 by authors of Brown University/U.S. and institutes from five newly independent states gives some outlook over the future ten years until 2006. Base for discussion were four rather extreme and abstract scenarios. Researchers and other experts from the region […]

Leseprobe

Inhaltsverzeichnis

ID 9482

Grählert, Sven: Integration and Dis-Integration and the Natural Gas Market in post-Soviet

Countries 1989-2001 - An Analysis of Price Convergence and Divergence Phenomena

Druck Diplomica GmbH, Hamburg, 2006

Zugl.: Eberhard-Karls-Universität Tübingen, Diplomarbeit, 2002

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Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

Table of Contents

INTRODUCTION ...7

1.1 Theories ...7

1.2 The Natural Gas Sector...8

1.3 Countries Covered ...9

1.4 Data

...9

1.5 Methodology...10

1.6 Plan

...10

ONE THEORY OF INTEGRATION AND DIS-INTEGRATION IN

POST-SOVIET COUNTRIES...11

2.1 Expectations of Experts of the Various Countries...12

2.1.1

Georgia...12

2.1.2

Ukraine...12

2.1.3

Belarus...13

2.1.4

Turkmenistan ...14

2.1.5

Kazakstan ...15

2.1.6

Russia ...15

2.2 A Cross-Country Picture...16

2.3 Relevance of the Study Regarding the Natural Gas Market...17

2.4 Dis-Integration of the Soviet Union and the Natural Gas Market ...18

RE-INTEGRATION OF THE CIS NATURAL GAS MARKET...21

3.1 Inter-Governmental Dimension ...21

3.1.1

Grouping the Countries...21

3.1.2

Main CIS Natural Gas Export Markets...23

3.1.2.1

Turkmenistan Iran ...23

3.1.2.2

Russia South-Eastern Europe and Turkey...24

3.1.2.3

Russia Europe...25

3.1.2.4

Russia China...28

3.1.3

The Countries as `Pieces' in Russia's Natural Gas `Puzzle'? 30

3.2 The Inter-Company Dimension ...31

3.2.1

Brief Portraits of the Players ...32

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

3.2.1.1 Gazprom ...32

3.2.1.2 Itera...33

3.2.1.3

The Independent Gas Producers...35

3.2.1.4

The Oil Companies...35

3.2.2

The Players Acting in the Strategic CIS...36

3.2.2.1

In Georgia and Turkmenistan to the South and South-West...36

3.2.2.2

In Turkmenistan and Kazakstan to the South-East and East...38

3.2.2.3

In Ukraine and Belarus for Access to the West...39

3.2.3

Restructuring of the Russian Monopoly ...41

3.2.4

Changes with the Reforms...42

3.3 Prices

...44

3.3.1

Data ...44

3.3.2

Purchasing Power Parity ...45

3.3.3

Russia's Domestic Market...47

3.3.3.1

A Start to Deregulate Prices ...48

3.3.3.2

Low versus International Prices? ...51

3.3.4

Russia's Export Market to the Near-Abroad...53

3.3.4.1

Comparison on FSU - Level...53

3.3.4.2

Comparison with Far-Abroad...54

3.3.4.3

Comparison with Russia's Domestic Market...55

CONCLUSION ...58

APPENDIX...61

5.1 Data

...61

5.2 Literature ...72

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

List of Tables

Table 1 Russian Natural Gas Exports to CIS Countries (bcm) ... 20

Table 2 Turkmenistan Natural Gas Production and Exports (bcm) ... 23

Table 3 Associated- and Natural Gas Production in Russia, 7 Months 2000 and

2001 (bcm)... 33

Table 4 Intra-FSU Natural Gas Exports by Gazprom and Itera (bcm)... 34

Table 5 Exchange Rate Movements of Russian Rouble per US Dollar* ... 44

Table 6 CIS Export Prices for Russian Natural Gas (USD per tcm) ... 53

Table 7 Ukrainian Import vs. Domestic Prices (USD per tcm)... 56

Table 8 Associated- and Natural Gas Production in Russia for 7 months 2000 and

2001 (bcm)... 61

Table 9 FSU Natural Gas Production (bcm)... 62

Table 10 CIS Export Prices for Russian Natural Gas (USD per tcm) ... 63

Table 11 Table from before Extended by Netback Prices and Average Russian

Domestic Natural Gas Prices (USD per tcm) ... 64

Table 12 Russian Domestic Gas Demand (bcm)... 64

Table 13 Russia's Natural Gas Balance Estimates According to Russia's Energy

Strategy until 2020 (bcm) ... 65

Table 14 United States Flour and Beef Prices (USD) ... 66

Table 15 Russian Domestic Gas Prices, Prices for two Standard Goods, Exchange

Rates (Russian Roubles, USD) ... 67

Table 16 Kazakstan Domestic Gas Prices, Prices for two Standard Goods,

Exchange Rates (Tenge, USD) ... 68

Table 17 Belarus Domestic Gas Prices, Prices for two Standard Goods, Exchange

Rates (Belarus Roubles, USD)... 69

Table 18 Ukraine Domestic Gas Prices, Prices for two Standard Goods (only for

1997), Exchange Rates (Hryvnyas, USD) ... 70

Table 19 Russian Exchange Rates and PPP Calculation (Russian Roubles, USD) 71

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

List of Figures

Figure 1 GDP Growth in CEE, SEE, and the CIS ... 19

Figure 2 Dynamics of FSU Natural Gas Production ... 20

Figure 3 Caspian Basin Gas Export Pipelines until 1998... 25

Figure 4 Russian and Soviet Natural Gas Pipelines to WE, SE, and CEE ... 26

Figure 5 CIS Natural Gas Market the Pipelines ... 29

Figure 6 Under(-)/Over(+) Valuation (Using Flour- and Beef PPP) Against the

USD ... 46

Figure 7 Russia: Comparable US Dollar-, Flour PPP-, Beef PPP-, and PPP

(RECEP) Exchange Rates... 47

Figure 8 Russian Wholesale Price vs. Demand ... 48

Figure 9 Russian Natural Gas Wholesale Prices (Rbls. per tcm) ... 49

Figure 10 Tariff Zones in the RF... 50

Figure 11 Russian Household vs. Industry (incl. Power Industry) Prices ... 51

Figure 12 Russian Average (HH, Ind) Domestic Prices vs. German and Far-

Abroad Netback Prices ... 52

Figure 13 Near-Abroad vs. German and Far-Abroad Netback Prices... 54

Figure 14 Ukraine/Georgia and Belarus/Kazakstan vs. German and Far-Abroad

Netback Prices ... 55

Figure 15 Average Domestic Kazakstan vs. Ukraine Prices relative to Average

Domestic Russian Prices... 56

Figure 16 Household Prices in Ukraine, Belarus, and Russia ... 57

List of Equations

Equation 1

P P P = S = P / P

... 45

Equation 2

i,t

= S

* P

i,t

i=1,2,...n,... 45

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

List of frequently used Abbreviations

ANCENTR Tsentr Politicheskoi Konyunktury Rossii (Centre for Political Economy in

Russia)

Bcm(pa) Billion Cubic Metres (per annum)

BP British Petroleum

CEE Central-eastern Europe

CIS - Commonwealth of Independent States

CISSTAT Interstate Statistical Committee of the Commonwealth of Independent States

CR Country Report

EBRD European Bank for Reconstruction and Development

EIA U.S. Energy Information Administration

FDI Foreign Direct Investment

FEK Federalnaya Ekonomicheskaya Komissiya (Federal Energy Commission)

FSU - Former Soviet Union

Gazprom - Gazovaya Promyshlennost (Gas Industry)

Gks (GOSKOMSTAT) Gosudarstvenny Kommitet Statistiki (State Statistics Committee)

GUUAM Georgia, Ukraine, Uzbekistan, Armenia, and Moldova

IEA International Energy Agency

IMF International Monetary Fund

Incl. - Including

JV Joint Venture

Km - Kilometres

LNG Liquefied Natural Gas

LOOP Law of One Price

MINENERGO - Ministerstvo Energetiki Rossiiskoi Federatsii (Ministry of Energy of the

Russian Federation)

OAO Otkruitoe Aktsionernoe Obshchestvo (Open Joint-Stock Company)

PPP Purchasing Power Parity

Rbls. Roubles

RECEP Russian-European Centre of Economic Policy

RF Russian Federation

SE Southern Europe

SEE South-Eastern Europe

Tcm(pa) Thousand Cubic Metres (per annum)

USD US Dollar

Vs. - Versus

WE Western Europe

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

1. Introduction

Integration and Dis-Integration or Dis-Integration and Integration or Dis-

Integration and Re-Integration can be quite a word play. The Dis-Integration of the

former Soviet Union (FSU) in the early 1990s marks a serious and unprecedented

development in modern history. It was a break-up of the Union of Socialist Soviet

Republics into fifteen newly independent states. Hereby, twelve states formed the

Commonwealth of Independent States (CIS), a structure that was to keep some

order over the break-up. Three countries the Baltics announced their total

independence and declared no will to be part of the CIS. A later Integration or Re-

Integration within the CIS is being actively discussed and debated up to now.

1.1 Theories

Several theories have evolved on the future of the region. Huntington's

(1993) thesis predicts the `Clash of Civilizations'.

He argues that the future battle

over world politics will be over religious and cultural factors. Huntington predicts

a split-up of the world along religious lines. In turn, Duncan (2001) rejects religion

to be a factor in the current developments of the CIS. He limits Kuzio's (2000)

idea of a division between the CIS into `radicals' and `pragmatists' among the two

groups the `Westernizers' and `Slavophiles'.

Duncan concludes that there is

generally a shift towards pragmatism in the foreign policies of the member states

of the FSU.

Disillusionment with the West is widespread. Most important factors

that make countries tend towards a Westernist' or Eurasianist' course are linked to

ethnicity and conflict. The author views the political regime and economic reforms

are less important. Other studies focus more on the relationship between Russia

and the other CIS countries. Alexandrova's (2001) arguments support the trend

towards pragmatism. She adds that Moscow gave up the concept of re-integration,

which it was convinced of in the first years of transition. Russia's foreign policy

from Yeltsin to Putin shifted from Multilateralism to Bilateralism.

Russian capital,

Huntington, S.P. (1993), 2

Kuzio, T. (2000), 82

Duncan, P.J.S. (2001), 15

Alexandrova, O. (2001), 462

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

invested in the near-abroad, is seen as a strong instrument to influence other CIS

states and force them to Moscow's security policy.

Another -less recent- study on "Integration and Disintegration" from 1997

by authors of Brown University/U.S. and institutes from five newly independent

states gives some outlook over the future ten years until 2006. Base for discussion

were four rather extreme and abstract scenarios. Researchers and other experts

from the region specialising in politics and security were confronted with the

scenarios and asked to discuss and express their views on the future of the CIS.

Economics did not play a major role in their debates over the tendencies within the

region. In my work I will demonstrate that the energy sector, particularly the

natural gas sector, plays an essential role in re-integrative tendencies. Logically,

the largest successor of the FSU, the Russian Federation, plays a dominant role.

1.2 The Natural Gas Sector

In Russian economic literature the `Oil and Gas sector' is often viewed as

one large combined complex.

Data from the early years after the break-up of the

FSU are often aggregate for the two sectors. However, whereas the oil industry in

Russia today is largely privatised, the natural gas industry is not. A number of oil

producers share the extraction of oil reserves of the country, which make up

approximately 20% of the world's total oil reserves. As for natural gas, the

`natural' monopoly Gazprom nowadays plays the crucial role.

Firstly, it is

producing more than 90% of Russia's natural gas.

Moreover and more

interestingly, Gazprom is transporting gas via its extensive pipeline network to

domestic and foreign customers.

Gas exports make up a voluminous part of the

country's GDP.

In addition to that, Gazprom is the largest taxpayer in Russia. It

is widely agreed that a functioning natural gas industry is a very important stability

factor for the country and the entire CIS. Moscow, therefore, must have a strong

interest in controlling the industry.

Near-abroad = Russian term for `other than Russia' CIS states. It initially included the Baltics. Since the

withdrawal of the Russian troops the Baltic States are no longer `near-abroad'. They belong to the `far-

abroad, which is basically all countries that are non-CIS. See Aleksandrova, O. (2001), 457

Kolchin, S.V. (2001); It is the so-called NGK = Neftegazovy Kompleks.

Gazprom = Gazovaya Promyshlennost (Gas Industry) [

www.gazprom.ru

]

Which was in 2000 about 22% of the world's gas production. See Aton (2001), 121; According to the BP

(2002), in 2001, Russia's total proven natural gas reserves amount to 31% of total share in the world.

IEA (2002b), 13

In 2001 Gazprom's export revenues made up approximately 18% of Russian GDP.

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

1.3 Countries

Covered

My study covers most countries that are significant within the natural gas

sector: Ukraine and Belarus as important transit countries for natural gas from

Russia to Central-Eastern, South-Eastern, and Western Europe (CEE, SEE, WE).

Both states are dependent on Russian energy imports. But, due to their

geographical location, they are in a favourable bargaining position. The small

republic of Georgia is importing Russian gas as well. While being of less

importance in terms of its role as a transit country for Russian gas, it plays a crucial

role in Russia's geopolitical strategy to secure future markets for natural gas and

other energy resources. Finally, two representatives of the Caspian Region and

Central Asia are part of my study: the natural gas producers Turkmenistan and

Kazakstan. With their major natural gas reserves, they are potential competitors for

Russia. The three large producers Russia, Turkmenistan, and Kazakstan- account

for the major share of natural gas produced in the FSU.

1.4 Data

Data on the natural gas balance of the countries including domestic and

export prices are adapted from Russian (GOSKOMSTAT (Gks), CISSTAT,

RECEP, Renaissance Capital, Aton), and international sources (BP, IEA, IMF),

and from individual authors' research. In general, domestic prices in the CIS and

export prices for Russian gas sold to the CIS are very difficult to obtain. The gas

monopoly is still to a large extent non-transparent, which could be an explanation

for its crucial political role. However, `popular' non-payment and barter deals up

to the second half of the decade of transition are other reasons for difficult export

price statements. Data for the first half of the 1990s is mostly available only

annually, while after 1995 - quarterly or even monthly. Russia's data as a whole

and most of Belarus' and Kazakstan's data were easier to find. My research in

Moscow proved to be quite successful. For the remaining states however, I found

only insufficient sets of data. Extensive travel throughout the CIS, personal

contacts in energy companies, ministries and statistical committees would have

made a change.

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

1.5 Methodology

As part of my work I will review prices for natural gas in the CIS.

Applying the theory of Purchasing Power Parity (PPP) enables me to compare

prices internationally. Unfortunately, the data limit allows only a rough

comparison. However, it supports trends developed in prior sections of the work. A

statistical analysis is not used due to the insufficient data set.

1.6 Plan

The structure of my dissertation is as following: Section 2 summarizes the

theoretical framework regarding integration and disintegration, based on findings

of the 1997-study by authors of Brown University. In the progress of the

dissertation I will illustrate that findings of the latter study are close to reality even

today. After explaining the theoretical framework I will outline the hypothesis of

my work. At the end of that section I will give an overview of the factors that lead

to the disintegration of the Soviet Union. I will then relate the impact on the natural

gas sector across the region. It is the outset on which the later work builds on.

In Section 3 I will describe the creation of a new CIS market for natural gas

on three levels driven by the Russian Federation. Given the fact that the natural gas

industries in the CIS are mostly state regulated, shedding light upon the inter-

governmental dimension will explain policies and -most importantly- Russia's

motivation. What strategies has Moscow developed over the years in terms of

controlling this sector? A further look at the inter-company dimension will picture

the main players large corporations- that are producing, transporting and

distributing natural gas throughout the region. It will support the tendencies about

Russia's role developed in the beginning of the section. That dimension will

illustrate the companies' role as the players on the domestic Russian and foreign

`near-abroad' market. The third part of the section will be a basic price analysis,

discussing the available data set. Do prices serve to understand evolving market

mechanisms and tendencies towards re-integration within the CIS?

Section 4 summarizes the findings of my work. I will put together the

`pieces' in Russia's natural gas `puzzle'.

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

2. One Theory of Integration and Dis-Integration

in post-Soviet Countries

Over three years beginning in 1994, authors of the T.J. Watson Jr. Institute

of International Studies at Brown University, Rhode Island, U.S.A. and several

partners in some of the republics of the CIS undertook a study titled "Integration

and Disintegration in the former Soviet Union: Implications for Regional and

Global Security".

Partners were institutes from Kazakstan, Georgia, Belarus,

Ukraine, and Russia.

After the dissolution of the Soviet Union the newly independent countries

followed different paths towards independence. Relations between the republics

were influenced by integrative and disintegrative factors. Some republics were

thriving for more independence than others. But this is not the only dimension of

post-Soviet development. Integration or Disintegration could be promoted by

cooperative and coercive means. Tension between integrative or disintegrative

factors could be resolved either by threats and force or by peaceful negotiation and

mutual accommodation. This discussion resulted in the formulation of four

scenarios:

Scenario 1: Integration under Russian Domination

Scenario 2: Cooperative Integration

Scenario 3: Unregulated Disintegration

Scenario 4: Cooperative Independence

In conferences, workshops, and interviews, a number of security experts

from the governments, universities, research institutes, political formations, and

media were asked about their opinion and forecasts for the future development

within the CIS. The respondents were confronted with the four scenarios, or

abstract models that highlighted crucial issues in the development within the CIS.

As could be expected, the findings of the study demonstrated that

specialists from different countries had different views on future processes within

the CIS. Few saw any of the four scenarios in its pure form as likely to happen. A

Hopmann, P.T., ... (1997)

The Russian partner institution was the MGIMO. (Moskovskii Gosudarstvenny Institut Mezhdunarodnoi

Otnosheni = Moscow State Institute of International Relations)

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

mix of elements of the four scenarios and a fluctuation over time was an accepted

outcome. Distinctions were usually made between regions within the member

states, long vs. short-term trends. What were the main conclusions by the

representatives of the five CIS-members that took part in the project?

2.1 Expectations of Experts of the Various Countries

2.1.1 Georgia

Both scenario 1 (integration under Russian domination) and 3 (unregulated

disintegration), were the personal experience most of the Georgian experts had

gone through. Russia is expected to militarily dominate Georgia in the near term.

For the medium term this might change totally to a complete withdraw from the

state, and even the Caucasus. That means for Georgia moving towards scenario 3

or 4 (cooperative independence). National independence is unquestioned and of

fundamental importance. The experts view a strategic alliance within GUUAM

possible, which would help to consolidate independence in the long term. And as

Croissant (1999) argues, the maintenance of close economic, political, and military

ties with the West may be the greatest guarantors of the republic's independence.

Scenario 2 (cooperative disintegration) seems to be least attractive or realistic.

2.1.2 Ukraine

Since independence Ukraine has always proceeded towards full

sovereignty. Nevertheless, Ukrainian elites are divided, mostly along regional

lines, with the East much more interested in further cooperation with Russia.

The majority of specialists attending the study were in fear that Russia

might pursue an integration policy by coercive means. If it became true, it is

deemed to fail, leading to scenario 3. They also favoured scenario 4. Ukraine could

gain total sovereignty and establish natural links with its other than Russia-

neighbours. One of the examples is Ukraine's course of an alternative leadership

role inside the CIS in the framework of GUUAM. Moshes (2002) however argues

that this attempt fails due to the fact that it does not address Ukraine's real

economic and security needs.

The GUUAM group comprises Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova.

Croissant, M.P. (1999), 287

Moshes, A. (2002), 160

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

The experts interviewed in the study added that while engaging in

partnerships with other CIS members, it could simultaneously focus on bilateral

agreements with Russia. With the announcement in 2002 as the `Year of Ukraine',

Putin signalled that Russia is indeed interested in better relations with its

neighbour.

Nonetheless, a number of respondents fear this scenario could lead to

destabilization because of sub regions drifting away, uncontrollable migration to

the north and East, and possibly climaxing into a break-up along the East-West

axis.

Scenario 2 is seen to be unfeasible. Experience of the last three centuries

had shown that close relations with Russia would inevitably lead to Russia's

domination, Ukraine's economic exploitation, and cultural assimilation. Only a

minority of respondents hope for scenario 2 in the long-term via scenario 4 in the

near term. Are therefore the voices favouring "Mutual Enrichment Instead of

Isolation" a sign for further rapprochement, as Moshes argues?

2.1.3 Belarus

Respondents from Belarus expressed strongest support for voluntary

integration. In institutional terms it is the most advanced integration with Russia.

Since the presidential elections in 1994, Lukashenko has been strong advocate for

the `Union State' with its neighbour to the East.

Whereby this is seen as solution

of economic problems that are expected to decrease with Russia's support.

Three

groups emerged from the study.

Lukashenko's supporters underline that integration is essential for the

economic survival of Belarus and is voluntary. It naturally results out of the two

countries' shared history and their `fraternal' peoples. Scenario 2 was named as the

most desirable because it would have numerous benefits for both countries, which

would give positive signals to other republics to join in.

Belarus Popular Front and other formations within the nationalist

opposition consider integration with Russia a deadly threat to sovereignty. From an

economic point of view they argue that both countries differ too much in their

balance of trade. Due to Lukashenko's undemocratic line, the respondents doubt

Moshes, A. (2002), 158

Nezavisimaya Gazeta, 12 Oct 2001, as seen in Moshes, A. (2002), 162

Duncan, P.J.S. (2001), 12

Alexandrova, O. (2001), 461

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

that it is a `voluntary choice' of the Belarussian people. The union with Russia

might lead to fears among other CIS states finally having to give in to Russia.

Scenario 1 will not last very long, but will give way either to scenario 3 or 4. The

latter is the most favoured one.

The `Centrists' share the views about risks of a union. However, they are

not opposed to integration of post-Soviet states that meets `everybody's' needs.

The group prefers scenario 2. Their main reason for criticism Belarus' economy is

not comparable with its neighbour's. It seems that Belarus attempts to extract

subsidies from Russia, but keeps failing. Result may be eventually a consolidation

of sovereignty (scenario 4).

2.1.4 Turkmenistan

Turkmenistan was unfortunately not included in the 1997-study. However,

as the others, it is an important player within the CIS natural gas market. As a

resource-rich country, Turkmenistan has also built up relationships with its natural

neighbours and tried to `re-focus' away from Russia and the CIS as a whole.

December 1997, the leaders of Turkey, Turkmenistan, and Iran signed a

memorandum of understanding to deliver gas via an Iranian pipeline.

Driving

force was the will to form a group independent of Russia. It would make it easier

to undertake projects for instance in the energy sector or the TRACECA. The latter

is also called the `Silk Road', a reactivation of an ancient trading corridor uniting

the countries in the region via connecting Central Asia with Europe.

Apart from

its will for more cooperation with its neighbours, the country tends towards

national self-reliance, retaining an administered economy and a clan-based

government bureaucracy.

In terms of the likely scenarios, I would align Turkmenistan with Georgia

and Ukraine, seeking scenario 4 in the near term with the option of closer

cooperation with Russia.

Duncan, P.J.S. (2001), 14; In his opinion, the country proclaimed neutrality, avoiding participation in the

CIS Customs Union, and the Collective Security Treaty.

Sagers, M.J. (1999), 146

Croissant, M.P. (1999), 281; TRACECA = Transport Corridor Europe-Caucasus-Asia

Gleason, G. (1997), 224

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

2.1.5 Kazakstan

Kazakstan's president Nazarbaev has persistently advocated the need for

scenario 2. The country is an active member of the CIS and the "Group of Four"

The experts see some kind of cooperative integration with clear limits in terms of

the states' sovereignty as likely and acceptable. Equally important is evolvement in

pacts with its neighbours in Asia, the Middle East and the West. For a long-term

development, the respondents seem to agree less. Scenario 1 is seen as unlikely.

Although Russia might tend towards it, it lacks the resources and willpower. The

majority expects scenarios 2 and 4. A very small group of experts claim that the

existence of tensions between the predominantly Russian-speaking areas in the

North and East and the mostly ethnic Kazak areas of the country could lead to

scenario 3. However, this option seems to be very unlikely. In fact, as Gleason

(1997) argues, the cultural division within the country is more a factor for political

stability and consensus, and less a threat for further disintegration.

2.1.6 Russia

As for the other countries, the feelings of Russian experts about the four

scenarios are very mixed. Over the next decade elements of all scenarios are seen

likely to occur. Mainly governmental officials form a majority that regards

scenario 2 as most desirable. For them Russia's interest is not to dominate the

region by force, but rather to encourage its near-abroad to form a voluntary

community, which is founded on shared heritage and common interests. Those

arguments underline the common opinion among Russian politicians of the

temporary existence of the CIS. In fact, the debate moved away from `re-

integration' to a very self-confident `what form should it take?'

A smaller number of respondents consider scenario 3 as a long-term trend.

Disintegration started in the late Soviet period and continued ever since. Although

Russia might attempt to stop this dynamic by coercive means, it would fail due to

its limited capacities. Instead it could even further destabilize the country and with

it the entire CIS.

In 1996 Kazakstan, Belarus, Kyrgystan, and Russia established the quadrilateral Customs Union.

Gleason, G. (1997), 237

Alexandrova, O. (2001), 460; Models for integration were the `soviet-communist model', the restorative-

integrational model, and the pragmatic-integrational model.

Integration and Dis-Integration and the Natural Gas Market in post-Soviet Countries 1989-2001

Another minority opposes this pessimistic view and pictures scenario 1 and

2 as more likely to happen. Inability to successfully compete on the world market

or to cope with the challenges such as NATO expansion, and basically the history

and cultural affinity that had drawn the people together, would evidently lead to

integration within the region. Surely, all the states have their own characteristics,

which results in different speed towards integration. The experts, together with

some representatives of Belarus, hope that countries integrating first demonstrate

to others the advantages to be derived from integration.

Moreover, an overall perception of a fairly rapid transition towards scenario

4 exists. Russia is not able to play the role Germany's economy played in fuelling

Western Europe's integration. As an example, energy resource-rich countries in the

Caspian basin are expected to develop their own ties with their natural

`neighbourhood'. In fact, the Russian side is said to generally accept this.

2.2 A Cross-Country Picture

In a final cross-country comparison of the scenarios the authors find areas

of convergence and divergence. Main divisions in the opinions lie between

Georgia and Ukraine on the one side, Russia, Belarus and Kazakstan on the other.

The latter group regards scenario 2 as desirable, although in practice it will lead to

scenario 1. Support for coercive means towards integration is perceived to be quite

strong in Russia. Most of the respondents fear that this domination occurs before

any option of mutual cooperative integration arises. Their argument: Russia is

widely believed to be too weak to reach this outcome, but it is very likely to go for

it. Most interesting, however, the group views the short-term scenario 1 collapsing

into scenario 3.

The second group consisting of Georgia, Ukraine, and in my opinion- also

Turkmenistan, treats sovereignty as an undisputable achievement. The countries

favour scenario 4 avoiding integration all together. The main obstacle for

following this path however is the weakness of the three states.

At the end, the dilemma is the classical game of the `chicken'.

There are

simultaneous attempts by each party to achieve the outcome that is considered

optimal, which results in an outcome both consider worst possible (scenario 3).

The game of the `chicken' is widely used in Game Theory. See Hopmann, P.T., ... (1997), 68

Details

Seiten
Erscheinungsform: Originalausgabe
Jahr: 2002
ISBN (eBook): 9783832494827
ISBN (Paperback): 9783838694825
DOI: 10.3239/9783832494827
Dateigröße: 1.1 MB
Sprache: Englisch
Institution / Hochschule: Eberhard-Karls-Universität Tübingen – Wirtschaftswissenschaftliche Fakultät
Erscheinungsdatum: 2006 (März)
Note: 2,3
Schlagworte: erdgas gazprom integrationstendenz pipeline

Autor

Sven Grählert (Autor:in)