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Kadyrov Seeks More Control Over Chechen Energy Firm

Acting Chechen President Ramzan Kadyrov on Monday called for a new economic strategy to make Chechnya financially less dependent on Moscow.

Kadyrov said that if Chechnya could develop its own economy, particularly its oil sector, it could become "a highly profitable donor region," Itar-Tass quoted him as saying at a roundtable in Grozny.

Grozneftegaz, which is 51 percent owned by Rosneft and 49 percent controlled by the Chechen government, currently extracts the republic's oil and gas reserves. Kadyrov complained that although Chechnya has such a large stake in Grozneftegaz, the regional government still has no real say in running the company, the Vremya Novostei newspaper reported Tuesday.

According to official figures published on Rosneft's web site, oil production in Chechnya in 2005 totaled 2.2 million tons, while gas output reached 500 million cubic meters.

"With average annual production increases of more than 240 percent since its creation in 2000, the enterprise has been one of Rosneft's most successful," the web site said.

But Kadyrov said Grozny had not profited from the success of the Chechnya's energy sector. Chechen oil and gas reserves are mainly used for export and the profits do not flow back to the republic, he said.

Plowing more of the profits generated by Chechen oil and gas production back into the republic's economy is not a new idea. In April 2004, then-President Akhmad Kadyrov, Ramzan Kadyrov's father, planned to create a new oil company that would give Chechnya a larger share of profits. But the plan did not work then and it is likely to do so now because Russian politicians are unwilling to allow Chechnya to become financially independent, analysts said.

Moreover, Chechnya is not alone in not being allowed to retain the proceeds of its energy reserves, said Valery Nesterov, oil and gas analyst at Troika Dialog.

Ramzan Barbarossa

The circumstances of Chechen President Alu Alkhanov's departure and replacement by Prime Minister Ramzan Kadyrov, right down to the date, was worked out with President Vladimir Putin in December 2006. This information comes from Kremlin and Southern Federal District sources who have become more talkative since the announcement.

One of the terms of the deal was that all of the parties concerned would stick to the agreed-upon script during the announcement. Strangely, Kadyrov, who is often considered difficult to manage, stuck to the bargain. It was Alkhanov's side that staged a counterattack in the press, suggesting that they should hang on to their positions or at least be provided with golden parachutes.

Up until last week, there had been two centers of power in Chechnya: the actual leader of the republic, Ramzan Kadyrov, and Russia's ambassador to Chechnya, Alu Alkhanov. Alkhanov was clearly no threat to Kadyrov, whose attention had been focused on next year's national presidential election. Because Kadyrov's authority is based on Putin's personal support, the only way he could avoid losing his position amid the Kremlin's pre-election power struggles was either to immediately become president of Chechnya or hope that Putin would remain president past 2008.

Let's be frank here: Any way you look at it, Chechnya is a mess. NATO ranks Chechnya's guerrilla forces as the strongest of their type in the world. It's not hard to understand when you consider that the republic was laid to waste three times in the 20th century: in 1944, 1995 and 1999. It is hard to hope for much when dealt such a hand, and it is hard to spell out a positive future using the letters "m," "e," "s" and "s."

The only realistic options open to the Kremlin under the current circumstances -- besides granting Chechnya independence -- are simple. One is to create a federal regime free of strict Kremlin oversight. This is what we would have had under federal military officers like Captain Eduard Ulman and Colonel Yury Budanov, for whom every male Chechen is a terrorist and every female Chechen they rape is a sniper. Theirs was a reign of terror during which a "clean-up operation" involved tossing a grenade into a cellar full of children, ultimately creating more separatists than they destroyed. Such a regime would be run by a political puppet who would have no realistic hope of maintaining order. In that case, the Kremlin would end up having to sacrifice the lives of federal soldiers to kill Chechens in order to prop up the government.

The second option could be labeled "Ramzan Barbarossa," in which Chechnya has a single functioning social institution by the name of Ramzan Kadyrov. Can anyone really doubt that Kadyrov would ever do anything but follow his own best interests in his dealings with Russia? And if Moscow can set things up so that Kadyrov's interests become identical to Russia's, he would manage the republic pretty much on his own. The results aren't likely to be pretty, but they give those in power on both sides what they want.

The Kremlin siloviki favor the first option, while Putin prefers the second. It is hard to say whether or not the decision he reached in late December came as a result of political squabbling, but it is clear that there are two ways to govern Chechnya: with Putin's personal support or with a bureaucrat puppet loyal to the Kremlin. These two systems are too contradictory for the state to allow them to try to weather the pre-election storms this year.

What remains to be seen is whether current loyalties in Chechnya will shift along with conditions there and in Moscow. The Spanish grandees of the 12th century solemnly swore they would maintain vassal loyalty to the king "as long as the king could force it from them."

(The Moscow Times 21.ii.07)

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