New meaning of energy diplomacy

The time will show how realistic is an accession of Azerbaijan, Armenia of Georgia. As for Uzbekistan, its new integrating activities, caused by a wish to revive economy and stimulate an inflow of investments, eventually, will make former views about the space change.

Vladimir Putin, speaking on national television on Tuesday, deemed it necessary to reveal one secret: "I will even reveal such secret in live transmission… At a recent meeting of Central Asian republics, the president of Uzbekistan told me that if Russia agrees to pass a part of its authorities, for instance on formation of tariffs, to supranational bodies, he didn't exclude a possibility that Uzbekistan might join the CES".

Uzbek authorities are really interested in unified economic relations with the neighbouring states, it is regularly stated at different negotiations within the CAC and the SCO.

The first time when they stressed it was at the June summit of the Shanghai Co-operation Organisation in Tashkent, where the Uzbek delegation offered its concept of a common market. Islam Karimov sceptically speaking about a possibility to receive Western financial aid stressed then: "Uzbekistan cannot develop its economy without foreign investments, despite its rich mineral resources." In relation with this he positively characterised the broadening Russian participation in the country's economy and, moreover, defined that process as a natural event: "The Russian capital has not only matured, it seeks to apply itself abroad." Such position of the republic's government was confirmed also at a meeting of the CAC heads of state about three weeks ago. In his conversation with V. Putin, I. Karimov observed that the economy of the region "already feels Russia's presence, Russian investments are coming, big companies are present, especially in energy." "I believe, - he said, - that it is the most correct way to achieve a target, which corresponds with both Russian and our own interests."

Moscow does not hide that it has found a correct approach in its communication with opponent partners from the neighbouring countries. Recently the Russian foreign minister Sergey Lavrov has stated that for Russia "the energy diplomacy today attains a priority significance". "For the foreign ministry the advancement of Russian foreign economic interests in the fuel and energy area is one of the most important tasks," - S. Lavrov has said, speaking at a plenary session of the fourth All-Russian Week of Oil & Gas.

The efficacy of such line was once again confirmed at a meeting of the High Level Group that took place in Kiev a couple of weeks ago.

According to the results of the meeting, the group acknowledged that timely interior procedures in their states were possible to make common principles of the VAT exemption come into effect as from 1 January, 2005. The first vice premier and finance minister of Ukraine Nikolai Azarov stressed that the Russian decision on an abolition of the VAT for oil export to Ukraine as from 2005, in the conditions of high world prices, will become a "stabilising factor for the Ukrainian market".

The energy resources will make an important part of the commodity turnover between the Commonwealth states this year as well, mainly due to growing Rissian exports. The minister of industry and energy of RF Victor Khristenko, who represents Russia in the HLG, said that the commodity turnover between the federation and three countries of the Common Economic Space this year is expected to reach $38 billion: $15 billion will belong to each Ukraine and Belarus and $8 billion - to Kazakhstan. According to V. Khristenko, by the presidential meeting planned in December the group will prepare big priority projects for discussion. "I mean, - the minister has explained, - motorways and railways, pipelines, electric power transmission lines, and a formation of a common energy market".

An interaction in energy suggests trade in electricity and services for its transportation. At the Kiev meeting V. Khristenko spoke about an interest of Russia in an extension of its co-operation with Ukraine in electric power, especially in relation with the completion of construction and commissioning of two 1000 MWt atomic power generating units at Khmelnitskaya and Rovenskaya nuclear power stations. Next year the export of electric power from Ukraine will be doubled reaching 12 billion kWt per hour, of which 6 billion kWt per hour more will be imported to Russian Federation.

The head of the Ministry of Industry and Energy has said that "co-operation in electric energy is one of the most successful and bright themes for the co-operation in the CES".

Moscow holds to this point of view also with regard to an extension of energy co-operation in Central Asia. Although, it is quite reserved about Sino-Uzbek offers to create a regional common market, supposing that an opening of the borders while some industries remain on different levels and export subsidizing and state support are based on different rules would provoke negative consequences. Sergey Tzyplakov, trade representative of RF in China, was quite clear about it: "While the economic component of the SCO is at the stage of becoming, attention should be paid to pilot projects, in such areas as energy and transport, where all countries would be able to participate in accordance with their potential."

Such approach is quite helpful for Tajikistan and Kyrgyzstan that need investments to develop transport and electric power routes (it is noteworthy that the Kazakhstani premier Danial Akhmetov already in April did "not exclude a possibility" that Kyrgyz Republic would join the CES).

At a last intergovernmental meeting of the SCO Kyrgyz authorities initiated a discussion on co-operation in the reconstruction of hydropower facilities in the country, whose resources could be used "in the interests of the entire region." Among the primary tasks they mentioned the completion of Kambaratinsky hydropower stations costing $2 billion. A part of money was provided by the "UEN of Russia" RJSC. The rest of the money is planned to be received from the future consortium participants, which could be companies from the neighbouring countries. By the way, a preliminary wish to participate in the construction of Kambaratinskaya hydropower station No.2 costing around $260 million has already been expressed by Kazakhstan, which plans to increase transit electric power supplies fromn Kyrgyzstan to Russia by 54% to 1.1 billion kWt per hour.

At the negotiations between the Russian and Tajik presidents in Dushanbe an agreement was reached on joint work on the construction of two hydropower stations: Sangtudinskaya and Ragunskaya. For the first one Russia is ready to spend $250 million, of which - $50 million at the expense of Tajikistani debt and "Russian aluminium" is going to invest up to $560 million into the second one.

The energy diplomacy will probably bring real integration fruit already in the nearest future, moreover the co-operation will be obviously taking place in different formats. It is difficult to say for sure whether Georgia, Azerbaijan or Armenia would join the CES, but the former sceptical perception of the Common Economic Space by the non-aligned countries changes with time. Especially after a certain sobering about their unfulfilled association with the West.

A couple of weeks ago there was a joint meeting of three left parties in Moldova - the Socialist Party, the Party of Socialists and the party "Labour Union", at which it was decided to propose to the authorities to carry out a referendum on an accession of the country to the Common Economic Space. In the nearest future the initiative group will issue an official letter on its registration. Valentin Krylov, secretary of the Party of Socialists, commenting on a necessity of such political action, in particular, said: "the vector of Kishinev foreign policy must still be oriented at the Eastern Europe, because nobody waits for Moldova in the Western Europe."