RUSSIA'S HOSTILE ACQUISITION

Russia is, for all intents and purposes, a corporation with the trappings of a nation-state. The core business of the Russian corporation is energy, its production and transport (as a result, Gazprom, Russia's key subsidiary, will likely become the world's most valuable publicly traded corporation, valued at over $1 trillion). Internally, production consolidation has led to the destruction of corporate competitors, to include domestic corporations (Yukos) and foreign partners (most recently BP). Externally, the focus has been on consolidating control over energy transportation (pipelines) and downstream integration (Europe, via soft pressure). Recent actions to control energy transportation include:

• Estonia. Estonia had a lucrative business shipping Russian energy resources via its ports (i.e. Muuga). To protect this business, Estonia tried to block the construction of a Baltic pipeline that would have allowed Russia to send resources directly to Europe. The result was a Russian economic blockade of the country and a cyberattack by "patriotic" Russian hackers on Estonian computer systems.
  
• Ukraine. To protect its low cost purchases of Russian energy, Ukraine began to exert control over Russian pipeline traversing its territory. Russia cut off supplies.
  
• Georgia. The construction of the BTC pipeline (1 million barrels a day, currently Azeri and potentially Kazakh oil) that bypassed Russian control led to intentional systems disruption that led to a weeklong energy blackout, support for domestic insurgents, and (most recently) a military invasion.
  

The Poison Pill
Georgia's mistake, and it is a common one, is that it thought that connectivity to the global system (as well as the US) was a viable defense against a hostile Russian takeover. As a result, it became a vital cog in the BTC and a willing participant in the US adventure in Iraq. That defense proved mostly hollow. In short, the only real defense against hostile takeovers by aggressive corporate states is to make the cost of the acquisition too expensive for the acquirer. The way to do this is through the development of a poison pill: the intentional disruption of Russian energy pipelines (see, "The Example of Georgia" January 2006 and "JOURNAL: Can Georgia become a micropower?" October 2006 for more on this). Global guerrilla methods, particularly cyber/physical disruption, compliment interconnection as part of a Micropower defense strategy.

Comments

[namhenderson]

What suprises me most (given the context of the discussion from your older post on Georgia and the possibilities of 4/5 GW against Russia) is that given the fact that the major downside (identified in the previous discussion) seemed to be the fact that any such actions (without extreme plausible deniability would be a cassus belli for Russia) once Russia had attacked why didn't Georgia put such plans into motion?
My thoughts are twofold. By then plausible deniability is shot if occuring within context of Russia-Georgia conflict..
Also, it seems and perhaps most importantly, that Georgia's leadership wasn't thinking very strategically nor did they seem to anticipate the speed at which eveything would unravel. Or perhaps they were deluded enought to actually think we (the USA) would step in to help?
All in all, Georgia could have made a much better show of it i think.. Surprised they didn't.

[John Robb]

Correct. Given that the downside of a Russian attack was already realized, the key objective for the Georgians should have been to make it as expensive as possible. The fact that they didn't, leads me to suspect they are still caught in market-modified cold war logic.

Of course, they aren't alone in being trapped by this old thinking. Almost all of the Western "expert" analysis on this microwar uses regional/cold war legacy logic. This is truly useless navel gazing in the current context. It doesn't explain the larger pattern of activity in any meaningful way.

[Duncan Kinder]

Here is a repost of a comment I made on Fabius Maximus' blog about the status of organized crime in both South Ossetia in particular and in Georgia in general.

Of course, we can only speculate as to what role organized crime played in causing this crisis; although - given how things work in that part in the world - it would not be surprising if that role was significant.

Furthermore, the disruption resulting from this war can only increase the degrees of freedom that organized crime thereabout will have to operate with.

Comment:

> One aspect of this is the possible role of and definite effect upon organized crime that this conflict will have. Both Georgia in general and South Ossetia in particular are filled with organized crime.
>
> The blurb for Organized Crime and Corruption in Georgia states:
>
> Georgia is one of the most corrupt and crime-ridden nations of the former Soviet Union. In the Soviet period, Georgians played a major role in organized crime groups and the shadow economy operating throughout the Soviet Union, and in the post-Soviet period, Georgia continues to be important source of international crime and corruption. Important changes have been made since the Rose Revolution in Georgia to address the organized crime and pervasive corruption.

http://www.routledge.com/books/Organized-Crime-and-Corruption-in-Georgia-isbn9780415368216

> Meanwhile, the abstract for The Political Economy of Organized Crime: Breakaway Regions in the Newly Independent States states:
> The regional fragmentation in Georgia's breakaway regions of South Ossetia and Abkhazia has larger repercussions for the successful consolidation of democracy in the newly independent states of the former Soviet Union. Tbilisi is encountering serious difficulty in governing these regions due to the rise of highly organized, Russian-backed crime groups in these two areas. Crimea in the Ukraine is experiencing a rise in Russian-connected organized crime as the ethnic Tartars demonstrate for greater regional autonomy from Kiev. As a result of exhaustive data collection on the types, origins, and financing of organized crime in Russia, the Ukraine, and Georgia through the Transnational Crime and Corruption Center, the potential exists to determine if correlation in a time-series analysis can be found between Mafia-connected Russian businesspersons, their investments and presence in Crimea, South Ossetia, and Abkhazia after 1991, and polling data from the regions concerning increasing
> calls for regional autonomy and independence. The relative silence from Russia on the issue of highly influential and corrupt Russian businesspeople promoting instability in these breakaway regions for fun and profit is disturbing in its implications for regional peace.

http://www.allacademic.com/meta/p_mla_apa_research_citation/0/7/0/5/6/p70568_index.html

[Z]

One of the problems with the poison pill approach is that quite often swallowing the pill is much more expensive than coming to some reasonable accomidation with the larger power. Keep an eye on some future Georgian leader to 'sell' a stake in the pipeline to Gasprom or such.

Not to say that the poison pill option is a useless one. Merely by its availability and the smaller power's willingness to use it, the larger power is more willing to share rather than scarf up the whole thing.

[John Moore ( Useful Fools )]

I think a more apt analogy is that Russia is a mafia with nukes and the trappings of a nation state. Georgia didn't pay its protection money, and with the pipeline, was cutting in on the take. Now they've been taught a lesson.

In all seriousness, Russia itself acts like an organized crime organization more than a corporation or a nation. This at least makes them a rational adversary, subject to economic pressure.

They may find that over-using their economic power and thuggish beat-downs will lead to a response in kind on the economic level, and they are not big enough to take on the EU, USA and Japan in that arena.

[Marcello]

"In all seriousness, Russia itself acts like an organized crime organization more than a corporation or a nation."

To quote the great Ledeen: "Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business".
To be fair a great deal of states live or have lived by this philosophy.

"They may find that over-using their economic power and thuggish beat-downs will lead to a response in kind on the economic level, and they are not big enough to take on the EU, USA and Japan in that arena."

Well, most of the EU, myself included, is quite happy to heat itself with russian gas.
Cynical of course but hearing for years the enemy du jour (be it Milosevic, Saddam, the iranians or whoever) being constantly described as the Hitler of the day has desensitized me to the cries of "Munich, Munich". I bet I am not alone.

The US on the other hand can barely chew what it has already bitten and is issuing strongly worded letters of protest as we speak.

Bottom line: the russians are somewhat better strategists than you give them credit for me thinks.

[Z]

Marcello,

How would you rate the military performance of Georgia vs Russia? Is their any way they might have pulled this off? By that I mean could they have captured south ossetia, driven out the local population and collapsed the tunnel in a 2-3 day period while Russia was hesitating (Olympics, Medvedev on vacation, etc) and then dug in and held out for a week or too while western media trashed the Russians and embarassed them into a ceasefire?

Could that have been their plan that now looks stupid only because it failed?

[Bal(t)imoron]

It seems one reason Georgia could not use cyber warfare is, that Russia succeeded at infiltrating Georgia's net. With such a failure, any attempt to disrupt Russian energy assets by cyber methods were doomed.

http://www-tc.pbs.org/newshour/rss/media/2008/08/13/20080813_cyber28.mp3

Do you have any information about how Russia did this?

[Marcello]

"How would you rate the military performance of Georgia vs Russia?"

I simply don't have enough info to really make a an informed comment on the campaign. That being said I might pass along some bits from the rumor mill I found interesting.

The tunnel issue: that's quite interesting.
One would think that a planned attack would include shutting down the enemy reinforcements routes if that is possible.
Given that such tunnel was apparently a critical chokepoint (but not knowing in detail the state of georgian communications lines,as I said, I cannot fully judge the impact of this) cutting it off should have been the opening shot of the war. Say a fuel truck going off inside the tunnel or something like that. Now apparently there have been some hints in the russian news (but this is second hand stuff) that the georgians might have planned to do just something like that but the FSB anticipated them. If true that would be noteworthy. It also seem that the Georgian military command and control networks were collapsed by the russians, which would explain a lot of things.

[Dimitar Vesselinov]

"How would you rate the military performance of Georgia vs Russia?"

The populations of South Ossetia and Abkhazia are masters of guerrilla warfare. Very tough warriors. Some photos from Georgia:

http://lsd-25.ru/2008/08/14/voyna-v-yuzhnoy-osetii-89-fotografiy-arkadiya-babchenko/

[Azr@el]

I don't see the efficacy of a small state utilizing a strategy of economic "direct actions" as a deterrent against a state with a superior military. Damage to economic infrastructure is painful, and can be a war winner if coupled with a military strategy that places pressures the enemies center of gravity. But, that the thing, without pressure on the center of gravity, states have the political and economic depth to shrug blown pipelines and dropped bridges; History has shown this.

What is the center of gravity of a modern state? In a word, legitimacy. This is even more true for post-industrial nations whose main economic infrastructure is located in the minds of it's income tax paying citizens who maintain advanced knowledge/service economies. Will any attack by small direct action cells be able to undermine the legitimacy of a nation-state such as the Russian Federation? A few pipelines are down for a few months, some roads are rerouted, etc.. Does that make the average Russian doubt the security offered by the government in Moscow?

Now take the opposite tack, whilst Tblisi is launching these irksome raids, Moscow will retaliate by bringing into play a army corp on Georgian soil. That means that while some bunch of Merc strategist are toasting their commando spectacles, the average Georgian is seeing his wife and daughter getting their legs split by marauding Russian troops. Whilst commentators are covering fallen bridges being denounced as terrorism by Russian officials, the closed media curtain around the battlefield will obscure acts of ethnic cleansing.

At the end of the day Georgia can drive up the price of fossil fuels and in return the Russian's can make the Georgian state a fictional entity. Now that doesn't sound like deterrent to me, It seems more like Individually Assured Destruction.

[Marcello]

"Does that make the average Russian doubt the security offered by the government in Moscow?"

I suppose the idea is that it would at least deter the attacking state. That being said I find this strategy being somewhat problematic. To work as a deterrent their capabilities,at least in general terms, must be known to the attacker. Yet in such operations secrecy is paramount. And frankly I am not sure that setting them up is as easy as it is made out to be in the article. Systemic sabotage of oil systems has been around for some time. Yet the kind of out of the area projection envisioned in the article has yet to happen. I suspect we are underestimating the difficulties involved.

[rick]

Here's a very different view of the war and our role in it (the Pravada piece quoted in here gives a sense of what the Russian populace probably think):
http://www.informationclearinghouse.info/article20507.htm

Also, Dimitar Vesselinov, thank you so much for the link. If that type of photography had been taken in Afghanistan and Iraq and had been shown in the US media, I think many war supporters in the US would have changed their minds. Of course, that's why the US mil control the press...