Power games in the Caucasus

By Kieran Cooke
In Dgvari village, Georgia

BBC News
8 May 2006

Roman Gogoladze, a farmer living in the village of Dgvari, high up in the
mountains of Georgia in the Caucasus, points at the foot wide cracks in the
walls of his house.
The whole structure looks as though it will soon collapse and slide down the
valley.

"Big powers - the oil companies and the government - are destroying our
homes and our land," he says.

"They are playing their money games and ignore people like us."

The anger of Mr Gogoladze and other villagers in Dgvari is mainly directed
at BP, the energy giant leading a consortium which recently completed the
world's longest pipeline project, stretching 1,767kms from Baku in
Azerbaijan via Tbilisi in Georgia to the port of Ceyhan on Turkey's
Mediterranean coast.

The Baku-Tbilisi-Ceyhan (BTC) pipeline and an associated South Caucasus gas
supply line are sunk into the mountainside less than one kilometre above
Dgvari.

Villagers say pipeline excavations have seriously destabilised surrounding
lands and allege that promised amounts of compensation have not been paid.

BP insists work on the BTC is not to blame for Dgvari's landslide problems.

It says it has offered $1m (550,000) of humanitarian aid to the government
to help resettle the villagers elsewhere.

Foreign investment

Georgia, one of the richest republics in the old USSR, went into sharp
economic decline following the collapse of the Soviet Union and the
country's independence in the early 1990s.


As Russia's economy went into free-fall, Georgia lost its key export market,
particularly for its food produce and wine.

More than a million of the country's 5m people were forced to emigrate in
search of jobs.

Though there have been limited signs of economic improvement recently, the
country - with much of its infrastructure in a state of near collapse, most
of its industry at a standstill and estimates of unemployment varying
between 30% and 50% - is in desperate need of investment.

The Georgian government says the BTC project will play a central role in
rejuvenating the country's economy.

According to government statistics, more than 60% of total foreign
investment over the past two years has been associated with the project.

"I have no illusions that this pipeline will solve all our problems, but
this is a start," says Georgia's president, Mikhail Saakashvili.

Seismic zone

However, many farmers along the route of the BTC, plus local environmental
groups, have voiced strong opposition.


The oil and gas pipelines go near the source of the country's famed Borjumi
spring water, a principal export.
Georgia is in a seismic zone: the BTC's critics say any earthquake activity
could cause massive environmental and economic damage.

The $3.6bn BTC project, strongly backed by the US and British governments,
plays a key role in an increasingly frenzied battle for control of vital
energy sources in the Caspian region and Central Asia, with Washington and
London viewing the presence of the pipeline as a vital counterbalance to
Russia's growing control over the area's energy supplies.

The Georgian government not only hopes to gain much needed funds from
charging for the transit of oil and gas through its territory.

With much of its own energy sources, including a network of hydro stations,
in a state of severe disrepair, the country is heavily dependent on imports,
particularly of gas, supplied by Russia.

Moscow, which has military bases in Georgia, has watched with concern as its
former republic has turned to the West: US military advisors are training
the Georgian army - President Bush visited Tbilisi last year, describing the
country as "a beacon of freedom."

At the beginning of this year Russia doubled the price of gas it supplies to
Georgia.

In late January, in the middle of one of the coldest winters on record, an
as yet unexplained explosion severed the pipeline carrying Russian gas to
Georgia, leaving a large part of the country without power for a week.

President Saakashvili was quick to point the finger at Moscow, alleging his
country was the victim of "outrageous blackmail."

Power and influence

Georgia is seeking to diversify energy supplies, though a gas import
agreement with Iran met with Washington's disapproval and was quickly
terminated.


The government is now negotiating terms for a gas supply from the BTC
associated South Caucasus Pipeline project.

Yet while the government says it's trying to escape from Moscow's shadow,
there are indications powerful political factions are pressing for the
sell-off of the country's power sector to Russian interests.

"Strange games are going on here," says Mrs Salome Zourabichvili, the
country's former foreign minister, sacked by Mr Saakashvili last year.

"There's a lot of infighting in government with a pro-Moscow faction seeming
to get the upper hand.

"What is white is black and vice versa. As everywhere else in the
territories of the old Soviet Union, Russia is using its power as an energy
producer to further its influence."

Empty promises

The complexities of local politics, big power rivalries and the energy
business mean little to Roman Gogoladze and his fellow farmers in the
village of Dgvari.

The government says there's a growing danger of landslides and has told the
village's 500 inhabitants they must leave.

"The Russians, BP, the government - they're all the same," says Mr
Gogoladze.

"All sorts of promises are made but nothing ever happens.

"When we protested against the pipelines, the police came and beat people
up. Not one person in the village was given work on the project. Indians and
Columbians were brought in instead and we were left with nothing - but we
are never going to leave our lands."