Part 7 (1/2)
The Russian command acknowledges 3000 fatalities and 8000 wounded but the numbers are probably way higher. The Committee of Soldiers' Mothers pegs the number of casualties at 12-13,000. Unpaid, disgruntled, and under-supplied troops exert pressure on their headquarters to air-strafe Chechnya, to withdraw, or to multiply the money budgeted to support the ill-fated operation.
Russia maintains c. 100,000 troops in Chechnya, including 40,000 active soldiers and 60,000 support and logistics personnel. The price tag is sizable though not unsustainable. As early as October 1999, the IMF told Radio Free Europe/Radio Liberty: ”Yes, we're concerned that it could undermine the progress in improving (Russia's) public finances.”
As they did in the first Chechen conflict in 1994-6, both the IMF and the World Bank reluctantly kept lending billions to Russia throughout the current round of devastation. A $4.5 billion arrangement was signed with Russia in July 1999. Though earmarked, funds are fungible. The IMF has been accused by senior economists, such as Jeffrey Sachs and Marshall Goldman, of financing the Russian war effort against the tiny republic and its 1.5 million dest.i.tute or internally displaced citizens. Even the staid Jane's World Armies concurred.
No one knows how much the war has cost Russia hitherto. It is mostly financed from off-budget clandestine bank accounts owned and managed by the Kremlin, the military, and the security services. Miriam Lanskoy, Program Manager at the Inst.i.tute for the Study of Conflict, Ideology and Policy at Boston University, estimated for ”NIS Observed” and ”The a.n.a.lyst” that Russia has spent, by November 2001, c. $8 billion on the war, money sorely needed to modernize its army and maintain its presence overseas.
Russia was forced to close, post haste, bases in Vietnam and Cuba, two erstwhile pillars of its geopolitical and geostrategic presence. It was too feeble to capitalize on its ma.s.sive, multi-annual a.s.sistance to the Afghan Northern Alliance in both arms and manpower. The USA effortlessly reaped the fruits of this continuous Russian support and established a presence in central Asia which Russia will find impossible to dislodge.
The Christian Science Monitor has pegged the cost of each month in the first three months of offensive against the separatists at $500 million. This guesstimate is supported by the Russians but not by Digby Waller, an economist at the International Inst.i.tute for Strategic Studies (IISS), a London-based military think tank. He put the real, out-of-pocket expense at $110 million a month. Other experts offer comparable figures - $100-150 a month.
Similarly, Jane's Defense Weekly put the outlay at $40-50 million a day - but most of it in cost-free munitions produced during Soviet times. A leading Soviet military a.n.a.lyst, Pavel Felgengauer, itemized the expenditures. The largest articles are transport, fuel, reconstruction of areas shattered by warfare, and active duty bonuses to soldiers.
The expense of this brawl exceed the previous scuffle's. The first Chechen war is estimated to have cost at most $5.5 billion and probably between $1.3 and $2.6 billion. Russia allocated c. $1 billion to the war in its 2000 budget. Another $263 million were funded partly by Russia's behemoth electricity utility, UES. Still, these figures are misleading underestimates.
According too the Rosbalt News Agency, last year, for instance, Russia was slated to spend c. $516 million on rebuilding Chechnya - but only $158 million of these resources made it to the budget.
Russia has been lucky to enjoy a serendipitous confluence of an export-enhancing and import-depressing depreciated currency, tax-augmenting inflation, soaring oil prices, and Western largesse. It is also a major producer and exporter of weapons. Chechnya serves as testing grounds where proud designers and trigger-craving generals can demonstrate the advantages and capabilities of their latest materiel.
Some - like the Inst.i.tute of Global Issues - say that the war in Chechnya has fully self-financed by reviving the military-industrial complex and adding billions to Russia's exports of armaments. This surely is a wild hyperbole. Chechnya - a potentially oil-rich territory - is razed to dust.
Russia is ensnared in an ever-escalating cycle of violence and futile retaliation. Its society is gradually militarized and desensitized to human rights abuses. Corruption is rampant. Russia's Accounting Board disclosed that a whopping 12 percent of the money earmarked to fight the war two years ago has vanished without a trace.
About $45 million dollars in salaries never reached their intended recipients - the soldiers in the field. Top bra.s.s set up oil drilling operations in the ravaged territory.
They are said by Rosbalt and ”The Economist” to be extracting up to 2000 tons daily - double the amount the state hauls.
Another 7000 tons go up in smoke due to incompetence and faulty equipment. There are 60 oil wells in Grozny alone. Hence the predilection to pursue the war as leisurely - and profitably - as possible. Often in cahoots with their ostensible oppressors, dispossessed and dislocated Chechens export crime and mayhem to Russia's main cities.
The war is a colossal misallocation of scarce economic resources and an opportunity squandered. Russia should have used the windfall to reinvent itself - revamp its dilapidated infrastructure and modernize its inst.i.tutions. Oil prices are bound to come down one day and when they do Russia will discover the true and most malign cost of war - the opportunity cost.
Russia's Israeli Oil Bond
By: Dr. Sam Vaknin
Also published by United Press International (UPI)
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Russian Roulette - The Energy Sector
Last week, Russia and Israel - erstwhile bitter Cold War enemies - have agreed to make use of Israel's neglected oil pipeline, known as the Tipline. The conduit, an Iranian-Israeli joint venture completed in 1968 is designed to carry close to a million barrels per day, circ.u.mventing the Suez ca.n.a.l.
It rarely does, though. The Shah was deposed in 1979, Egypt became a pivotal Western ally, the Israeli-developed Sinai oil fields were returned to Egypt in the early 1980's, and, in a glutted market, Israel resorted to importing 99 percent of the 280,000 barrels it consumes daily.
According to Stratfor, the Strategic Forecasting consultancy, ”tankers bearing Russian crude from the Black Sea port of Novorossiysk would unload at Israel's Mediterranean port of Ashkelon. After that, the oil would traverse the Tipline to Israel's Red Sea port of Eilat, where it would be reloaded onto tankers for s.h.i.+pment to Asia. The Eilat-Ashkelon Pipeline Co. estimates the pipeline will be ready for Russian crude in mid-2003.”
Russia is emerging as a major oil supplier and a serious challenge to the hegemony of Saudi Arabia and OPEC. Even the USA increasingly taps the Russian market for crude and derivatives. With Arab countries - including the hitherto unwaveringly loyal Gulf states - progressively perceived as hostile by American scholars and decision makers, Russia arises as a potent alternative. The newfangled Russian-Israeli commercial alliance probably won applause from Was.h.i.+ngton hardliners, eager to relieve the Saudi stranglehold on energy supplies.
Quoted by the American Foreign Policy Council, Russia's Energy Minister, Igor Yusufov, addressing the Russian-US Energy Forum in Houston, Texas, last month said that ”the high degree of economic and political stability that the Russian Federation has achieved makes it a reliable supplier of oil and gas.”
He expressed his belief - shared by many a.n.a.lysts - that Russia will become a major exporter of oil to the USA ”in the foreseeable future”.