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10.05.2009

May 3, 2009 (the date of publication in Russian)

Konstantin Cheremnykh

MORNINGSTAR COMES DOWN TO EARTH

The old manipulator's new career starts with a flop

THE PATRON OF REFORMERS AND DEFECTORS

In the Cold War times, each of the contesting global powers used to regularly inform the interested audience of the current achievements of the corresponding side. The race was over twenty years ago, remains of the Berlin Wall being enthusiastically ransacked by thousands of liberated individuals (a phenomenon later reproduced in the state museum of Baghdad). Still, the side that proclaimed itself the winner, has not got rid of the informing habit until today, and its top officials continue to report about new victories at the Eastern Front, while the interested audience expresses indignation each time when the effort is not enough diligent.

In particular, the Harvard University and its specialists in supervision of Russian reforms underwent severe criticism from CSIS and Nixon Center in 1997-99. Professors Andrey Shleifer and Jonathan Hay were exposed of using federal budget assistance for Anatoly Chubais's privatization team for their own private needs (Mr. Shleifer's Russian origin regarded as an aggravant). The scholars displayed sincere surprise: they believed that by distributing federal expenses into their pockets, they demonstrated a didactic example to Moscow disciples. In his 1997 testimony before the Senate Committee on Banking and Financial Services, another Harvard scholar Richard Morningstar (then-Special Secretary for assistance to newly independent states), explained himself with utter sincerity: "If we hadn't been there to provide funding to Chubais, could we have won the battle to carry out privatization?" (Curiously, he had earlier characterized Mr. Chubais as a "selfless visionary"). In the later issued memoirs "Privatizing Russia", co-authored by Mr. Shleifer and Chubais associate Maxim Boiko, the controversial method of distributing assistance funds achieved a broader theoretical substantiation: "Aid can change the political equilibrium – by explicitly helping free-market reformers to defeat their opponents."

Mr. Morningstar had grounds to boast with his achievements: due to his supervision of Russia's State Property Committee, the very definition of public ownership was completely wiped out from legislation and practice (arriving in Western Europe, Russians are embarrassed to come across public banks, companies, and lands). For this achievement alone, Mr. Morningstar deserves a badge of honor as a pioneer of the new phase of competition, in addition to the medal of a Cold War winner.

However, the achievements of the commander of the Harvard Brigade were not duly rewarded though Mr. Morningstar, despite being a modest civilian specialist, greatly succeeded also in the military sphere. In 1997, he reported to the US Congress about complete nuclear disarmament of Ukraine. In Kazakhstan, he successfully converted the major Soviet bacteriological weapons facility into a miserable but perfectly private joint-stock enterprise. In this case, individual interest was also crucial: the required information about the classified institution was derived from its former director Kanatjan Alibekov, who was granted a private laboratory in the United States along with a new name of Ken Alibek.

Still, the post of "special secretary for assistance" was eliminated by an ungrateful Bill Clinton. Like a Soviet apparatchik whose service is not any longer required, Mr. Morningstar was re-assigned to a different position, created for him personally: namely, the supervisor of the energy resources of the Caspian Sea. In the new capacity, he worked with the same exceptional zeal, managing to materialize the Baku-Tbilisi- Ceyhan oil pipeline (after a decade of exploitation of its mirage for unleashing several ethnic wars in the region).

The mission was really hard: Mr. Morningstar had to soothe the Ukrainians who thus found themselves utterly dependent from Russian oil deliveries from Novorossiysk, and the Georgians who had hoped to derive huge profits from oil shipments via their own port of Supsa. In the latter occasion, Mr. Clinton's military endeavor was quite helpful: days after the Baku-Supsa pipeline was re-launched, the city of Belgrade underwent a perfectly democratic and anti-totalitarian bombing, with accidental damage for all the major bridges across the Danube thus making upstream tanker deliveries from Supsa to Balkan states utterly unavailable.

As a civil specialist, Mr. Morningstar dealt with military contractors only by occasion, when these appeared to have a second specialization in delivering drilling equipment. Therefore, it was

Mr. Morningstar (and not Mr. Cheney, as it is erroneously believed) who invited Kellogg, Brown & Root to the Caucasus.

This choice was unsurprising: yet in the capacity of Special Secretary for NIS assistance, Mr. Morninngstar served also as vice president of the Overseas Private Investments Corp. (an entity resembling Chubais's committee in its mode of function). This tool enabled to regularly report about more achievements in suppression of Russian influence. In fact, OPIC was supposed to play an instrumental role in a strategic mission of pushing energy deliveries, alternative to Russian projects. As a pioneer in the great endeavor of diversification of European energy supplies, OPIC was a key sponsor of the Burgas-Skopje-Vlora oil pipeline, supposed to deliver Caspian oil from Novorossiysk not via the Bosporus and not along Ukraine's Odessa-Brody pipeline but across Bulgaria, Macedonia, and Albania. The poor Ukrainians had thus to realize that the helpful Washington was focused on a more strategic task than to assist their 50-million nation, as the Burgas-Vlora transit could establish efficient control over three other nations in one package. The additional task was to create an alternative to the Russia-sponsored Bulgarian-Greek pipeline from Burgas-Alexandrupolis a far cheaper route but Russia-controlled and thus undesirable.

Moreover, the Burgas-Vlora pipeline appeared to coincide with what was named Strategic Corridor No.8. Therefore, the project achieved economic expertise from colleagues from the respectable Credit Suisse First Boston (where Richard Holbrooke, the ideologist of the Dayton deal, then served as Vice President), and legal advice from White& Case (where Bill Clinton was reserved a job after his second presidential term was to expire).

This cozy Democratic cooperation did not contradict to the involvement of the neoconservative Kellogg, Brown & Root simultaneously in the Burgas-Vlora pipeline project and in the Camp Bondsteel Air Force base in Kosovo. That was unsurprising as well, as a perfectly civilian Trade & Development Agency specialized in "promotion of competitive US industries", including oil and gas industries and aviation.

The Bulgarian side had certain reservations over the Burgas-Vlora project. Firstly, the pipeline was more than twice longer than the Alexandrupolis route. Secondly, the developing company, AMBO, was a not quite transparent agency, chaired for some reason by a Macedonian-born US architect Vuko Traskovskij who had nothing to do with oil. However, TDA reassured the righist Bulgarian government of Ivan Kostov, delivering a generous tranche of financial support to Sofia (the ruined Balkan states being a bit amazed with this move). The "Chubais method" worked perfectly: the promised pipeline never emerged, but the undesirable Alexandrupolis project was stalled as well.

Between 1999 and 2001, Mr. Morningstar was employed as US Ambassador in the European Union. Despite belonging to the Clinton team, he stayed in this position after November 2000, but was forced to leave two days after the 9/11 assault of the supposed Al Qaeda on New York. Though no official explanation for his disgrace were available, rumors spread that the anthrax powder, distributed by the same supposed Al Qaeda, originated from Ken Alibek's testtube.

Like a Soviet apparatchik caught red-handed, Mr. Morningstar preferred an official investigation to withdrawal from state service, and humbly retired to Harvard. The Baku-Ceyhan pipeline was set into motion already without his involvement, but he sometimes modestly reminded of his contribution at specialized economic symposiums. In 2004, Morningstar's name surfaced in the failed John Kerry race, being mentioned in the context of deals with Iranian businessman Hassan Nemazee who "lobbied for normalization of US relations with Iran and has raised over half a million dollars for Kerry's campaign".

ZEINO BARAN'S GUIDELINES

The implemented Baku-Ceyhan pipeline, as well as the still hypothetical Burgas-Vlora, is far from being profitable. When a new tumult emerges in the transit state of Georgia, or in the Kurd-dominated districts of Turkey, oil traders prefer to shift to the Baku-Novorossiysk route that now bypasses Chechnya. However, the Turkish budget does not lose much, as the same oil traders have to pay for passing via Bosporus. The same Bosporus is used by Russian companies that conveniently use the otherwise meaningless Odessa-Brody pipeline in the reverse southward direction to the Black Sea. One of those reverse traders in TNK-BP, a joint venture of the same company that sits in Baku, and thus the operation is beyond suspicions, also safeguarding the would-be alternative pipeline from corrosion.

For obvious reasons, Turkey is similarly uninterested in Burgas-Vlora and Burgas-Alexandrupolis, as both would evade a significant portion of transit revenues. In order to keep both projects stalled, Turkish companies promote two alternative pipelines across its own territory to bypass Bosporus (one of them with Russian assistance), while "self-made" greenies and anarchists regularly flood the streets of Burgas when trans-Bulgarian projects are put back on the table.

As a true Democrat, Mr. Morningstar could not help experiencing some stings of remorse before countries that missed the transit cash. In an interview to John Hopkins University's CACI bulletin, the ex-Ambassador rhetorically exclaimed: "How can we speak about real cooperation in the region while the Nagorno-Karabakh issue is unresolved, and Armenia cannot benefit from regional projects?" Ostensible Armenophilia was displayed by Mr. Morningstar also in the framework of the Boston branch of Bnei Brith's Anti-Defamation League he is a member of: when the branch's chairman was kicked out for recognizing the 1915 massacre of Armenians in Turkey as genocide, he hurried to protect the colleague, warning against an undesirable split of the Jewish organization over the issue.

Still, Mr. Morningstar's merits, associated with Baku-Ceyhan, are appraised so highly in the Turkish intellectual community that as soon as the Democrats are about to return to the White House, he gains valuable support from relevant circles. At a June 2008 meeting of the Senate's Foreign Affairs Committee, Zeino Baran, Hudson Institute's Eurasia Center chair and active promoter of Turkish interests in US decision-making circles, reminded of his contribution, hinting that Clinton's 1998 decision to appoint a special representative on Caspian affairs was quite reasonable, while the latter elimination of this post dispersed the function among various authorities. Ms. Baran's activity, to a certain extent, was family business: a year before in Istanbul, she married Assistant Undersecretary Matthew Bryza, who had started his career in the State Dept as Morningstar's assistant in 1998. By that time, a laborious Bryza had been already overloaded with regional tasks, shuttling between Tbilisi and Ashgabat to secure loyalty of Caspian states to Washington.

In her report, Ms. Baran two months before Tbilisi's bloody assault on the breakaway South Ossetia raised alarm over the hypothetical plans of Moscow to occupy Ukraine's Crimea, also lamenting about a "split in NATO" over membership of Georgia and Ukraine. Appraising Baku-Ceyhan along with the Baku-Erzurum gas pipeline, Mrs. Baran expresses anxiety over the Russian plans to implement Burgas-Alexandrupolis, and diplomatically omits any reference to the alternative Burgas-Vlora (that is similarly unfavorable for Turkey) though as recently as in 2007, Sofia, Skopje and Tirana finally signed a relevant trilateral agreement (shortly before Vladimir Putin's trip to Bulgaria).

Ms. Baran's advice to "forget" about Iran's involvement in any pipeline projects, alternative to Russian deliveries, follows the same pro-Turkish logic. Still, surprisingly, the scholar is enthusiastic about the so-called White Stream project in its non-Iranian version (suggesting transport of gas from Azerbaijan to Georgia directly to Ukraine, one branch reaching Crimea), as a "younger brother" of the much-discussed Nabucco pipeline again, in the non-Iranian version (from Turkmenistan along the hypothetical Transcaspian undersea route to Azerbaijan, Georgia, Turkey and a second undersea passage to Romania, Hungary, Austria and desirably Germany).

Urging Washington to "put an end" to the monopoly of Russia's Gazprom, Ms. Baran lamented that Ali Babacan, Turkey's Energy Minister, had not achieved strong guarantees of Nabucco's support. Addressing Senator Lugar, an experienced Cold Warrior, the scholar insisted on a "firm bipartisan commitment" on the Caspian-Europe Corridor".

The square message of Ms. Baran, though conveyed in a pugnacious manner corresponding with the Russian translation of her last name (a muttonhead), was eventually perceived by the White House only ten months later. This happened after Barack Obama, promising Turkey to back it EU bid and forgetting the word "genocide" in his address to Armenians on the commemoration date, realized that these presents don't sufficiently guarantee absolute loyalty of Ankara to Washington despite even the fact that Russia's alternative to Nabucco, the undersea South Stream project, does not involve Turkey.

On April 20, five days before the planned "Natural Gas for Europe: Security and Partnership" conference in Sofia, Richard Morningstar was again "mobilized and recruited" to the Caspian (like poet Vladimir Mayakovsky to the People's Commissariat for Education). Moreover, he has to patronize not only alternative pipelines but also alternative energy, as well as prevention of global warming, in the expanse between the Black Sea and Afghanistan. In other words, he is supposed to supervise not only oil companies but also environmentalists which like in the case of Burgas projects can serve as a special channel of distributing assistance funds.

THE "P" METHOD DOES NOT WORK

The April 25 Sofia event, advertised as a groundbreaking triumph of diversification policy, was supposed to celebrate a strategic triumph over Russia's Gazprom. In late 2008, British expertise confirmed the earlier statements of Turkmenistan's leadership about enormous reserves of Iolotan (Eleten) gas deposit in the south-western Mary region of the country. After that, EC Chair Jose Manuel Barroso promptly raised the issue of diversification at the EU-Russia summit, and the Russian-Ukrainian gas conflict of January 2009 (that affected also deliveries to Bulgaria) served as an additional argument for "crushing the monopoly". Subsequently, the Nabucco project was joined by RWE, a loser in the earlier rivalry for partnership with the same "vicious" Gazprom, and a failed bidder for a major electric energy facility in Russia.

RWE's top managers Juergen Grossman, Stephen Juedisch, Jeremy Ellis and Michael Rose descended on Ashgabat on April 16, and signed a memorandum on exploration of a major gas deposit on the Caspian shelf. Their visit coincided with the arrival of the newly-appointed Israeli ambassador Shemi Tzur, Thus, Nabucco was gaining as Mrs. Baran had proposed a distinct anti-Iranian accent. It is noteworthy that during his trip to Istanbul after the G-20 and NATO summits, Barack Obama hailed the opening of the Turkish-Armenian border that served as an indispensable precondition for arranging the major railway link via the Caucasus to the Caspian for the cargo shipped to Afghanistan. The project had been correctly viewed in Tehran as a pretext for additional military concentration along Iran's borders.

The messages delivered by major speakers reflected the essence of the matter: for instance, Mr. Ellis urged Bulgaria to give up "the poker game" the definition earlier applied to the supposed flirt not between Sofia and Gazprom but between Washington and Tehran. However, the scale and meaning of the conference was remarkably downsized: most of the invited countries dispatched not heads of states but PMs or just ministers. Ukraine's President Victor Yushchenko preferred to stay in Kiev, emphatically assembling his National Security Council for "meeting the demands of the European Commission concerning anti-corruption policies". In fact, he demonstrated his indifference to Nabucco, which was not going to bring any profit to his country, and disbelief in the White Stream though the Georgians were hyperactive in promoting Nabucco's "younger brother". The presence of the key US promoter of Baku-Ceyhan the project that ruined the earlier Ankara-Kiev accord obviously did not much encourage the Ukrainian leader as well.

Russia's PM Vladimir Putin, who earlier hoped to use the event for signing the deal on South Stream with Bulgaria's PM Sergey Stanishev, also decided to stay at home: Sofia raised disaccord on the property status of the domestic pipelines after the project's implementations, using the opportunity of Mr.Barroso-sponsored Third Energy Package, passed by the European Parliament on April 22. In any case, Putin expected Stanishev, a Moscow University postgraduate, to visit Russia in a few days (the agreement to be initialed on mutually acceptable terms). Thus, the ceremony of "reloading" US-Russian energy relations, entrusted to Mr. Morningstar, was reduced by two levels: he had to shake hands not with Putin but with Energy Minister Sergey Shmatko, which was only a piece ("shmatok" in Russian) of diplomatic pleasure.

Still, the real fiasco of the scenario was represented with the gaping absence of Turkmenistan's President Gurbanguly Berdymuhammedov. The Turkmen leader was reported to have got into a serious confrontation with Kremlin, rejecting a privileged deal on Iolotan, and thus believed to be an easy gain for Western planners especially after signing the deal with RWE. By the time of the Sofia conference, however, he had already met with one more intereseted side Beijing’s CNPC.

On April 24, Berdymukhammedov hosted another event, held under UN auspices in Ashgabat, and involving top representatives of China, India, Iran, and all the presidents of Central Asia states. Addressing a really broad Eurasian audience (which included Russias Vice PM Igor Sechin), the Turkmen leader made clear that his nation is going to maintain its neutral political status, cooperate on an equal basis with China, Russia and the EU (Beijing mentioned first also in the list of honored guests), and pursue energy policies on the principle of direct contracts with consumers (the approach preferred by Gazprom) and long-term contracts (opposite to the EC initiatives).

The only delegate of the Ashgabat event that traveled to Sofia was Czech Vice-PM Alexander Wondra, whose attempts to assure the audience of the success of the Nabucco game did not sound convincing. Meanwhile, Turkey's President Abdullah Gul demonstratively named Azerbaijan's Ilkham Aliyev as his "brother", thus delivering a clear message that both states are unlikely to buy the carrot of EU entry promise in exchange for a deal with Armenia.

The snubbed Mr.Morningstar was forced to use a "poker argument", probably unpleasant for Mr.Ellis and colleagues: he hinted that Washington does not except direct energy cooperation with Iran. At the same time, he intoned that after all, Nabucco is no Holy Grail, and that Bulgaria is inevitably dependent on Russian gas. The most astounding remark of the US Ambassador for the Bulgarian press was his answer to their impatient inquiry on the long-promised Burgas-Vlora pipeline: "Sorry, but I sincerely don't know much about that".

For the second time, Mr. Morningstar was snubbed in Prague on May 8: the event, expected to logically consolidate the success of Sofia, was equally ignored by all the heads of the Central Asia states, though the very title of "Southern Corridor: The New Silk Route" supposed a pompous groundbreaking ceremony. Moreover, the representatives of these states (Turkmenistan represented by a Vice PM) even refused to sign the joint declaration.

Though Turkey, Georgia, and Azerbaijan gladly committed themselves for alternative energy cooperation, and promptly summoned one more conference, endorsing a railroad across three countries bypassing Armenia, Mr. Morningstar has to admit that the beginning of his new career in the former USSR is marked with a spectacular disgrace. On the day of the Prague conference, Mahmoud Ahmadinejad confirmed his bid for a new presidential term in Tehran, while France (whose President neglected both anti- Russian events) raised objections against Turkey's entry in NATO. A day earlier, at the long-expected summit of Eastern Partnership, the format of this plan, also heavily promoted by Mr. Barroso, was in fact curtailed to a list of vague and unbinding recommendations.

Surprisingly for Mr. Morningstar, Mr. Bryza and Ms. Baran, the earlier universal "Chubais technology" appears to be not as workable as it was a decade ago. While larger and self-sustainable nations are focused on long-term contracts with China (on April 28, Rosneft struck a major oil trade agreement with CNPC), smaller nations that had hoped so much for profit from their buffer function between the East and the West, are piling up grudges to their patrons.

According to a paradigmatic remark of a dictatorial finance minister from Eugeny Schwartz's play "The Shade", an inconvenient partner should undergo either a P (pay) or a S (slay) treatment. Ken Leahy advertising article about Chechen warlord Anzor Astemirov, published in February 2009 by the same John Hopkins University bulletin, suggests that diplomatic failures may be compensated with paramilitary subversion in target regions.

In his recent piece for Asia Times, Prof. M. K. Bhadhakumar reminds of "excellent connections" Mr. Morningstar enjoys in Baku. This means that the bloody games, played from this area in the North Caucasus, are likely to be resumed. After all, the perfectly democratic elections in Iran cannot serve as a single pretext for concentration of military force along the Black Sea-Caspian route. Thus, the name of the haunted KBR is likely to surface in its traditional multiple-use context. Meanwhile, American and European taxpayers could inquire about the costs about the so-called strategic initiatives that have brought more despair and blood to the patronized countries than economic sustainability a necessary precondition for real independence.


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