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    May 20, 2016

    Ports, oil, and Taman: How Russia will return Ukraine to Eurasia Part 1

    May 20, 2016 - 
    Yurasumy, PolitRussia - 
    Translated by J. Arnoldski 



    Control over trade routes has always been the best way to control the development of a given country. Not a single state in the modern age can remain in isolation. The time of natural farms has sunk into oblivion. Each new technological mode merely increases the degree of integration between countries and thus leaves them dependent on the global economy. 

    Washington planned to control Russia in accordance with this very same scheme. The collapse of the USSR and the separation of its important “borderlands” (the Baltic states, Belarus, Ukraine, the Caucasus, and Central Asia) practically completely cut it off from external markets. Traditionally, Soviet trade went through the Western border, the Black Sea ports of Ukraine, and the Baltic ports. We’ll discuss the second point another time, but today we’ll focus on the southern transport route, how Russia’s infrastructural dependence was overcome in this area, and which tectonic shifts in politics led to this. 

    Ukraine, the southern castle of Russia

    The critical importance of Ukraine to Russia is obvious. The point is not even the presence on Ukrainian territory of several dozen million former compatriots who could most easily of all be involved in a new Eurasian integration project. the point is that it is precisely through Ukraine during the time of the USSR that the most important trade routes ran to Central Europe - and not through the Bosphorus to the Mediterranean countries and southern Asia. In the 1970’s-’80’s, the flow of goods between the USSR and its economic partners greatly multiplied. The capacity of the USSR’s merchant fleet increased and demanded a corresponding increase in port infrastructure. New ports in the Black Sea region were mainly concentrated in Ukraine, which was assigned a large portion of the trade fleet. All major pipeline routes also went through the territory of this former Soviet republic.
    In general, in the 1970’s and ’80’s, the critical pressure points for the Soviet Union (and consequently for Russia) were concentrated in Ukraine, which thus could not but become a zone of great interest for the USA.

    The pipelines running through the territory of Ukraine had a practical monopoly on the delivery of Russian gas to Europe. Russia was quite dependent on these Ukrainian pipelines as well as other routes of transit traffic (railways and highways) in the country. 

    The tap set 

    In 1991, the Ukrainian oil tap was set between Europe and Russia. Accordingly, further US policy in the region centered around ensuring that this oil tap would be “overlapped” and thereby become a reliable mechanism for affecting the economies of the EU and Russian Federation.

    The collapse of the USSR and the subsequent economic recession of the post-soviet republics made this dependence less critical. Russia slowly died economically, declined demographically, and emasculated itself spiritually. The “American dream” was in place only because in the 1990’s and the first years of the 2000’s the region was calm. The control mechanism for strangulating Russia was in place but not being used. 

    There was the chance that all of the wealth of the USSR sooner or later would be turned over to the new masters of the world, and therefore it was irrational for them to destroy everything and then use their own money to restore it. 

    The first attempts to revive Russia encountered tough resistance. The first Maidan was not a random event. In 2004-2005, the United States switched to Plan B: the strangulation of Russia by means of the Ukrainian “switch.” The objective was disrupting Russia’s economic growth and stopping the EU from pulling itself out from underneath the US’ weighty supervision.

    In 2004, for the first time, the United States grossly interfered in the constitutional process in Ukraine. They pushed their protege, Viktor Yushchenko, into the presidency and in the following year began the first Ukrainian-Russian trade war.

    From outside, this looked absurd. Despite already having a contract for gas supply at $50 per 1,000 cubic meters, Viktor Yushchenko insisted that the price start at $99, and then did everything in order for the price of gas in the country to grow higher and higher. He was actively “aided” by his sworn assistant, Yulia Timoshenko. 

    From a geopolitical point of view, all of this happened logically and timely. It was obvious that this was just the first step which would sooner or later end in the blockade of Russia by the Ukrainian side. And this threat could not be overlooked. 

    Despite the very much that has been done over the last decade, Russian gas exports still transit through Ukraine to this day. A critical part of production has not yet been “moved” to or “recreated” in “mainland Russia.”

    Quite a lot has been written about Moscow’s efforts to avoid dependency on pipeline transportation, and the author sees no reason to rehash this here. It is only worth noting that pipelines could have become the objects of trade wars between Russia and Ukraine, but they did not, and an iron logic and action plan can be seen this pattern. 

    Really, why do we hear so much about gas and even ammonium wars, but never hear about oil war? After all, Russia is much more dependent on stabile deliveries of oil than it is on gas “needles.”

    Oil products can be conveniently transported and stored for the long-term. The oil terminal “Sheskharis” created as early as the 1960’s in Novorossiysk essentially rendered a Ukrainian oil war against Russia senseless. The presence of an alternative route immediately knocked this out of Kiev’s hands and this means that Washington loses almost all the cards in its hand.

    Last year, around 40 million tons of bulk cargo (30 million tons of oil and bout 10 million tons of oil products) travelled through Novorossiysk. The second node in the region is the Tuapse port which is capable of handling up to 15 million tons of oil and petroleum products. It is precisely this circumstance which does not allow Kiev to play the “oil card.” 

    According to the plans to reconstruct the Sheskharis terminal before 2020, its capacity could allow up to 65 million tons of oil and oil products per year. As for other goods, over the last decade many of them have been re-directed thanks to new terminals entering Russian ports, including containers and dry cargo. The only truly thin point today is the Togliatti-Odessa ammonium pipeline which constantly backs up works at half the capacity, which costs the state and businesses billions in losses.
    In 2012, an ammonium war erupted between Russia and Ukraine (under Yanukovich by the way). In that year, Kiev’s decision to cease the unique ammonium flow between Togliatti and Odessa led to the Russian side losing 500 million rubles. Twelve ammonium production facilities ceased work.

    The accelerated development of Russian ports in the Black Sea began with the collapse of the Soviet Union. In the 1990’s Novorossiysk slowly started to become the number one port in Russia. But only after the “new course” was there a sharp surge in the transit of goods through this port. If in 1999 the turnover of the port amounted to 50 million tons, then within three years, this was already 80 million tons. In 2005, the volume reached 112 million tons, and Novorossiysk actually ran into a dead end. 
    The problem is that the port is not only a set of docks, but also a travel infrastructure. Pipelines, railway tracks, and highways all congest it. The further development of this port was possible only after solving these problems, which meant entirely different investments and developmental programs. Only the creation of a comprehensive development program for the region on the basis of the country’s development strategy as a whole (in fact a return to Gosplan in a new style) could allow the problem to be solved.

    It would be necessary to link not only construction companies and production sites, but also the development plans of enterprises which provide traffic, and all of this would have to be provided with energy and cadres. In general, this is a task for a decent amount of time.


    And here is where geopolitics mingles in. Such a program has been created and is already partially realized.

    Continued in Part 2 


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    Item Reviewed: Ports, oil, and Taman: How Russia will return Ukraine to Eurasia Part 1 Rating: 5 Reviewed By: Jafe Arnoldski
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