Publication: Prism Volume: 4 Issue: 11

This past fortnight was an eventful one, as Russia was shaken by a financial crisis and a miners strike, while maverick general-turned-politician Aleksandr Lebed emerged as an election victor. Moscow, meanwhile, won full membership in the Group of Eight. But that event was overshadowed by India’s nuclear weapons testing, more problems in ratifying the START II treaty and a move by U.S. lawmakers to level sanctions against Russia. In the South Caucasus, finally, Moscow’s hand was evident in a brief but deadly conflict that erupted between Georgians and Abkhazians.


Russia was plunged into financial crisis as confidence in the ruble crumbled. The Central Bank raised its refinancing rate from 30 to 50 percent on May 18 and then, on May 27, to 150 percent. This was a desperate and dangerous move since it increased the cost of government debt-servicing and deepened the budget deficit. But the alternative–devaluing the ruble–was seen as even more dangerous.

This was the third and most serious assault on the ruble that the Central Bank had fought off in eight months. By sparking a return to high inflation, devaluation could undo all that had been achieved during six years of painful reforms. Investment would slump while living costs would soar. Russia could then face not just a financial crisis but a political and social one as well.

The crisis was one of confidence. Analysts said there were no structural reasons for panic and pointed out that the basic principles of Russian economic policy were unchanged. In 1997, Russia’s economy showed its first signs of growth since the reforms began. Investor optimism was undermined, however, by the turmoil on emerging markets worldwide and, in March of this year, by President Boris Yeltsin’s decision to sack the experienced government of Viktor Chernomyrdin and Anatoly Chubais and replace it with an inexperienced team led by Sergei Kirienko. Budget cuts announced on March 25 did little to restore confidence, since the main problem was seen not as the size of the budget deficit but the fact that it was larger than the government’s ability to raise revenue. The government’s continuing failure to collect taxes was in turn a symptom of Russia’s real, underlying problem: weak government.

Speaking on Russian television on May 28, Yeltsin insisted there was no cause to panic and that the Central Bank had sufficient reserves to prevent a collapse of the ruble. Moscow was nonetheless understood to be appealing to the International Monetary Fund for a short-term stabilization fund to shore up the ruble.


Aleksandr Lebed rattled his rivals when, on May 17, he was elected governor of Krasnoyarsk Krai with 57 percent of the vote, easily defeating incumbent Valery Zubov. The result was a blow not only to the Kremlin, which had supported Zubov, but also to the Communists, who had formed an unlikely alliance with Zubov in the hope of keeping Lebed out. The Communists saw Lebed as a threat because they were competing for the same constituency–unpaid, disgruntled workers, resentful pensioners and disillusioned nationalists. Lebed did not hide his intention of using Krasnoyarsk as a launchpad for his presidential ambitions, but insisted he would run for president in 2000 only if he had first managed to get the krai’s economy on its feet. Observers were struck by the strength of Lebed’s anti-communism and by the fact that, while he admitted to being a novice regarding economic theory, he expressed strong support for private enterprise.


Thousands of striking coal miners threatened to bring the country to a halt by blocking the Trans-Siberian railway as well as railroads in the north and south of the country. Much of Russia’s freight, particularly across Siberia’s inhospitable territory, moves by rail. The miners were demanding payment of wage arrears amounting to as much as six months. Unpaid doctors and teachers joined them on strike. President Yeltsin criticized the miners’ action, saying it was seriously damaging Russia’s already delicate economy. The government persuaded the miners to lift the blockades by paying some of the wage arrears, but leaders of the miners warned that, if they were not fully remunerated by June 5, they would resume their protests. They were supported by the Communist Party, whose motion for Yeltsin’s impeachment is due to be debated by the Russian parliament on June 2.


In the North Caucasus Republic of Dagestan, gunmen on May 20 seized a government building in the capital, Makhachkala, hoisting the green flag of Islam and demanding that the leader of the republic should in the future be elected by popular vote. The gunmen were supporters of Nadirshakh Khachilaev, chairman of the Union of Muslims of Russia and a leader of Dagestan’s Lak community. At first, the republic leadership promised to agree to the gunmen’s demands. Once the crisis was defused, however, they appeared to go back on their promise. Observers warn that a further increase in ethnic tensions is likely in the republic, which borders on Chechnya.


Russia gratefully accepted a promotion to full membership in what had been the Group of Seven, but the April 15-17 summit of G-8 leaders in Birmingham found itself upstaged by India’s unexpected conduct of underground nuclear tests and the threat of a nuclear arms race between India and Pakistan. G-8 leaders did manage an opening statement condemning India’s actions. But differences among G-8 leaders doomed efforts by the United States, Canada and Japan to enact a coordinated series of economic sanctions against New Delhi.

Russia’s reluctance to take strong actions against India grows out of the close relations that exist between Moscow and New Delhi. The Kremlin sees those ties as a linchpin of its foreign policy in Asia and is also loath to endanger lucrative arms dealings that it has with India. The nuclear tests conducted by New Delhi appeared also to launch a debate in the Kremlin over whether Moscow should continue its cooperation with India in civilian uses of nuclear energy. Not unexpectedly, Russian atomic energy officials spoke against the curtailment of such activities.

In the event, India’s nuclear tests appeared to be as much of a surprise to Russia as they were to other countries. Foreign Minister Yevgeny Primakov called the tests “totally unacceptable” and a “short-sighted” policy. Russia also warned Pakistan against conducting nuclear tests of its own in response, and threatened that international reaction to such a step would be “no less harsh” than that which occurred following India’s tests. Given the weak response of Moscow and many other world capitals to the Indian tests, the warning seemed unlikely to deter Pakistan. On May 28, Islamabad announced that it had conducted nuclear tests of its own.


The prospect of a nuclear arms race in Asia focused renewed attention on Russian-U.S. nuclear arms control talks, and raised some hopes that the Russian Duma might at last move to ratify the START II treaty. Indeed, U.S. President Bill Clinton won fresh assurances from Russian President Boris Yeltsin in Birmingham that the Kremlin would redouble its efforts to win ratification of START II. Ratification would also open the way to a long-delayed Russian-U.S. summit later this year and to follow-up talks aimed at concluding a START III treaty. START III would bring further reductions in U.S. and Russian nuclear arsenals. But Russian lawmakers, who a few months ago had at last seemed ready to move forward on START II, appeared to dash those hopes when they announced a postponement of hearings on the treaty until fall. The postponement appeared in part to be a by-product of the rancorous confrontation between president and parliament that accompanied the recent nomination of Sergei Kirienko as Russian prime minister.


The Clinton Administration on May 18 announced a decision to waive sanctions against three foreign companies–including Russia’s Gazprom–for their participation in a $2 billion project to develop Iran’s South Pars gas field. The Administration’s decision was based on a belief that the sanctions would not, in any event, have stopped the gas project. It was aimed also at easing tensions with both the European Union and Russia, each of which has strongly condemned the U.S. legislation mandating the sanctions. In return for the waiver, Washington received from the EU and Russia a pledge to tighten control over the export of weapons technology to Iran.

But the action by the White House appeared only to strengthen support among U.S. lawmakers for a new sanctions bill–called the Iran Missile Proliferation Sanctions Act–that would impose penalties on companies or other organizations found to be exporting missile technology to Iran. That legislation, which was clearly aimed at Russia, was approved overwhelmingly by the U.S. Senate on May 22.

The Senate vote came despite an intense lobbying effort against the sanctions by the Clinton Administration. White House officials had argued that sanctions could inadvertently undermine U.S. efforts to stop Russian-Iranian cooperation in the development of an Iranian ballistic missile. They also pointed to renewed assurances from President Boris Yeltsin–and to a series of recent measures taken by the Kremlin–as proof that Moscow was moving finally to tighten controls over defense related exports. Russia, not unexpectedly, criticized the Senate vote. A Foreign Ministry official accused the United States of falsely citing missile proliferation concerns in order to challenge “legitimate trade and economic ties” between Russia and Iran.


For the first time since 1994, major combat flared up this fortnight between Georgian and Abkhaz forces. Divide-and-rule policies in Moscow, which had ignited the conflict in the first place, also produced its latest exacerbation.

The Russian military had intervened in 1992-93 to ensure Abkhazia’s secession from Georgia and has sealed that secession to date behind the protective screen of Russian “peacekeeping” troops. That arrangement also perpetuated the ethnic cleansing of nearly 300,000 Georgians, who had formed 45 percent of Abkhazia’s pre-1993 population (compared to only 17 percent Abkhaz). In the last two years, Georgia sought Russian consent and international political support for the return of the refugees to their homes and for a political compromise with Abkhazia based on federalism. The Abkhaz side ruled out negotiations on those terms as Moscow, in its own interest, condoned Abkhaz intransigence. Meanwhile, the UN and Western powers declined to get involved, and the unrecognized Abkhaz state consolidated. Some 40,000 to 50,000 Georgian refugees nonetheless managed to filter back to their native villages in Gali district.


In recent weeks, Tbilisi apparently developed a military option as an adjunct to the political and diplomatic tracks of its policy. Georgian guerrilla groups–the preexisting White Legion and, especially, the recently formed Forest Brothers–became increasingly active and effective in Gali. They presumably had some support from Georgia’s security agencies, and received open moral approval from political leaders in Tbilisi. The guerrilla operation could not possibly have hoped to defeat the Abkhaz militarily, let alone to challenge the Russian troops. Its apparent aims were to increase the flow of the returning refugees, establish a liberated zone in Gali district, and bring the Abkhaz leadership to the negotiating table in order to discuss the region’s future status in a federalized Georgia. A liberated zone in part of Gali district was taking shape and seemed to be growing in the first half of May.


Faced with the risk of attrition of their territory, the Abkhaz leaders launched a massive retaliatory operation in Gali on May 18. Initially, Georgian guerrillas beat back the Abkhaz Internal Affairs Ministry troops. The Abkhaz responded by committing additional forces and long-range artillery to the fighting. Tbilisi, without quite matching the escalation, sent in some of its own Internal Ministry units. Then, on May 23, the Abkhaz committed their Army troops, equipped with tanks and other hardware. These forces began routing the Georgian guerrillas, also prompting a mass exodus of Georgian civilians from the area.

At that point, President Eduard Shevardnadze and other Georgian leaders backed down. They decided against committing Georgian Army troops to the fighting, and they sued for peace in Moscow and in the Abkhaz capital Sukhumi. It was in the Abkhaz town Gagra that Georgian Foreign Minister Irakly Menagarishvili signed on May 26 a ceasefire agreement with his unrecognized Abkhaz counterpart Sergei Shamba. By the time the ceasefire took hold on May 27, the rout of the Georgian guerrillas and Internal Affairs units was complete; and some 30,000 to 40,000 Georgian civilians–that is, most of those who had filtered back to Gali in the last few years–had once again been turned into refugees. As usual in post-Soviet conflicts, the battle casualty figures from the two sides are not only mutually conflicting but also internally contradictory. They would appear to range in the low hundreds.


The Gagra agreement stipulates an immediate ceasefire; a mutual withdrawal of the “supplementary” forces which were introduced in Gali district since the beginning of the fighting; joint monitoring of the ceasefire and of the disengagement; and the return to Gali of the newly displaced Georgians, once the ceasefire and the disengagement are complete.

The stipulation regarding the return of the newly displaced Georgians is already being nullified by Abkhaz scorched-earth methods in the recaptured villages. Russian Television, which enjoys privileged access to the area, reports that Abkhaz troops are deliberately setting fire to the empty Georgian homes in order to preclude the return of their inhabitants. Despite the complete cessation of the fighting, large clouds of smoke are seen from afar rising over Gali district.

In further steps aimed at blocking the refugees’ return, the Abkhaz authorities have imposed strict regulations requiring individual permits for crossing the “border” from Georgia. The Abkhaz side has also beefed up Internal Affairs troops in Gali district, and introduced Defense Ministry’s troops with combat hardware in the adjacent Ochamchira district. These measures contravene the 1994 Georgian-Russian-Abkhaz armistice and subsequent tripartite agreements. Far from envisaging any Abkhaz-Georgian “border,” those agreements explicitly recognize (even if pro forma) Georgia’s territorial integrity. The measures also almost certainly breach the limit of 300 troops that Abkhazia’s Internal Affairs Ministry is allowed to keep in the security zone under the 1994 armistice and the latest ceasefire.


The conflagration unfolded inside the security zone officially controlled by Russian “peacekeeping” troops. They did nothing to prevent it. Once it broke out, the Russian command tilted toward the Abkhaz side and eventually ensured its victory. The decisive move was to allow the Abkhaz to bring their army troops and combat hardware into the security zone, where such forces are banned. Politically as well, the “peacekeeping” command emboldened the Abkhaz side. It issued statements justifying the Abkhaz operation as one “aimed to clean the territory of bandit detachments and criminal elements”–a reference to the Georgian guerrillas and, at the same time, an implicit abdication of responsibility. Officially mandated to maintain order in the security zone, the Russian command in effect delegated that responsibility to the Abkhaz forces and gave them a green light to proceed.

Russian Television reporting from the scene confirmed the Abkhaz use of tanks and heavy artillery in the Gali fighting. This substantiates Tbilisi’s complaints that the Russian troops, in violation of their mandate, had allowed the Abkhaz to bring and use the hardware in the demilitarized zone.

Still more to the point, that combat hardware, which ultimately made the decisive difference, could only have originated from Russian arsenals. It must have been either a part of the equipment supplied to the Abkhaz in the 1992-93 war, or transferred at some subsequent date. The fighting from May 18 to 26 reproduced some of the features of the final stage of that earlier war. Once again, the small Abkhaz forces prevailed thanks to superior, Russian-supplied firepower and logistics; and again they crowned the military victory with reprisals against the Georgian civilian population.

The Abkhaz, now flush with victory, are also displaying a degree of suspicion about the Russian “peacekeepers'” conduct. The Abkhaz are asking aloud why those troops allowed Georgian guerrillas to penetrate the security zone with impunity during the weeks that preceded the all-out fighting. Can it be that the Russian command winked at the activities of the Georgian guerrillas–or of planners in Tbilisi–before unleashing the Abkhaz against the Georgians? Such tactics are known to have been used in post-Soviet conflicts.


In Moscow, the Foreign Ministry publicly urged Shevardnadze and Abkhaz leader Vladislav Ardzinba to hold a Russian-mediated meeting and to “normalize” the situation. It blamed both sides for failing to agree on the repatriation of refugees (an indirect swipe at Abkhazia) and on prevention of “terrorism and subversion in the security zone” (a direct swipe at Tbilisi). The tenor of Russian Foreign Ministry statements and the attitude of the Russian troops suggest that Moscow remains content to manipulate the conflict as arbiter.

Russian support of Abkhaz secession at the beginning of this decade had aimed to thwart Georgia’s independence and force the country to grant basing rights to Russian troops. After Shevardnadze’s return to power, Moscow used Abkhazia as counterleverage to the Georgian leader’s rapprochement with the West.

Those earlier aims remain operational, but an even more important one has emerged in the last year or so. It has to do with Georgia’s unique role as a linchpin in the planned transit corridor that would link Central Asia and the Caspian region with the West, bypassing Russia. The independence of Central Asian and South Caucasus countries, and the development of their vast natural resources, hinge in large measure on the fate of this lifeline to the West. A Russian-dominated Abkhazia, by virtue of its location, considerably narrows the exit from the Caspian to Europe via Georgia. An unstable or cowed Georgia could mean the closure of that exit altogether. As in 1992 and since, Abkhazia provides Moscow with the means to fan turmoil in Georgia. Seen in this light, Shevardnadze’s decision to cut Georgian losses and concede a temporary defeat in Abkhazia may have been the most statesmanlike choice available in these circumstances.