Analysis: Georgia's emergency and oil

WASHINGTON, Nov. 15 (UPI) -- On Nov. 7 Georgian President Mikheil Saakashvili declared a 15-day state of emergency. Saakashvili's announcement is portentous and ominous for global Western energy markets.

On Nov. 9 Georgia's Parliament, voting 149-0 of the 225 parliamentary members who were present, with opposition lawmakers boycotting the vote, endorsed Saakashvili's decree, pitting them against strident Georgian protestors and concerned Western allies.

The decision follows a Nov. 2 rally of nearly 50,000 at an anti-Saakashvili protest outside Parliament, where demonstrators called both for early elections and for Saakashvili to resign.

Saakashvili, who came to power during the 2003 "Rose Revolution," has adopted a determined pro-Western policy, pressing for Georgia to join NATO and the European Union. He also sent Georgian troops to Iraq and announced in March the country would double its commitment from 750 to 2,000 soldiers and indicated a willingness to send Georgian forces to serve alongside NATO forces deployed in Afghanistan.

Saakashvili's credentials are certainly pro-Western. Educated in the United States, he replaced longtime President Eduard Shevardnadze.

Saakashvili's ardently pro-Western policies greatly irritate Russia, which resents Western intrusion into the former Soviet space that it regards as the "near abroad." His policies since his inauguration have also generated domestic protest, most notably when on May 10, 2005, during a speech by U.S. President Bush on Tbilisi's Freedom Square, a disaffected Georgian lobbed a hand grenade toward the podium, which failed to detonate. The would-be bomber, Vladimir Arutyunian, subsequently received a life sentence.

The issue extends far beyond the Caucasus and could well prove the incident that sends global oil prices skyrocketing above $100 per barrel.

The reason? The West's largest operational post-Soviet energy project, the $3.6 billion, 1,092-mile 1 million barrel per day Baku-Tbilisi-Ceyhan pipeline traverses 155 miles of Georgian territory, moving high-quality Azeri crude from its offshore Azeri-Chirag-Guneshli fields to Turkey's deepwater Mediterranean terminus at Ceyhan. It is the second-longest pipeline in the world and officially opened in May 2006, supplying an estimated 1 percent of global daily energy needs. To lessen the risk of terrorist attack, the pipeline is buried along its entire length.

BTC is the second pipeline transiting Azeri crude to cross Georgia. In 1999 the 550 mile Baku-Supsa pipeline opened, but its carrying capacity is only 100,000 bpd, one-tenth of BTC's capacity.

If Saakashvili's regime founders and a new administration emerges in Tbilisi, then these projects could both be at risk as a new, more militantly nationalist government might decide to renegotiate transit terms.

Seeking to defuse Western concerns, on Nov. 8 Saakashvili announced that a referendum would be held Jan. 5, simultaneously with the presidential vote, on whether to bring elections forward to the spring rather than their scheduled autumn date. Opposition leaders subsequently called off their protest campaign.

The wild card in the political situation is Russia, which Saakashvili has accused of fomenting the demonstrations, a charge that Russia has rejected. Deputy Prosecutor General Nikoloz Gvaramia announced on national television that Shalva Natelashvili and Tsotne Gamsakhurdia, who are in hiding, were behind a coup along with three confederates from the Russian Embassy. Opposition leaders were in no doubt of Kremlin involvement, with pickets outside the Russian Embassy bearing placards saying, "Moscow, you can have Saakashvili."

In a move viewed with suspicion by Saakashvili's government, the opposition's main financial backer, billionaire Badri Patarkatsishvili, who co-owns with Rupert Murdoch's New York-based News Corp. the private Georgian television channel Imedi, announced his intention to campaign for president. Patarkatsishvili is in London, but the Prosecutor General's Office has said it wants to question him, as it suspects his possible involvement in plotting a coup.

U.S. officials initially reacted cautiously to Saakashvili's actions; on Nov. 7 U.S. State Department spokesman Sean McCormack said, "If there are political differences within the political system in Georgia, they can -- they should be worked out within the confines of that political system and also, they should be worked out in a peaceful manner."

On Wednesday Georgian Parliamentary Speaker Nino Burjanadze said, "The state of emergency will be canceled on November 16. Life will switch to a normal regime. I hope we will begin preparing for the elections and will hold them in a fair manner."

Despite hopes for normalcy, it would seem that Georgia has emerged as a backwater remnant of the Cold War whose brittle democracy will leave Western energy consumers nervously awaiting events.